The 25-year-old has agreed a deal with Mike Ford's side after impressing both at club and international level in 2014.
Matawalu has scored 22 tries in 59 appearances during his time in Scotland, while he has four tries in his nine caps for Fiji.
Ford is looking forward to adding the scrum-half to his squad next season and believes Matawalu will be a welcome addition to their attacking options.
"Niko is an incredibly talented and exciting young player," he told the club's official website. "And we're eager to see his skill-set worked into our attacking style of play.
"He's a great character, and we know he'll fit in really well at the club."
Matawalu is relishing the chance to test himself in England, and also performing on the European stage.
"I'm really happy to be joining Bath next season," he said. "They are a very ambitious club with a very talented squad and coaching team.
"I'm looking forward to getting settled in and testing myself in the Premiership and top flight of Europe, but for the remainder of the season my focus will be with Glasgow."
Bath sit second in the table, two points behind defending champions Northampton Saints after 10 matches.