The 21-year-old centre-back, who made 10 appearances during a loan spell with the Hatters last season, has agreed a two-year deal at Kenilworth Road.
A Republic of Ireland Under-21 international, Rea came through Albion's academy and featured twice for the Seagulls in the League Cup.
Luton boss Nathan Jones worked with Rea during his time as a coach at Brighton.
"He's a player and a character that I've got a lot of time for," Jones told the club website.
"It's taken a while. Brighton had a valuation of the player that we've had to negotiate, and we've got there in the end."
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League Two side Luton Town have signed defender Glen Rea from Brighton & Hove Albion for an undisclosed fee.