The 23-year-old, Boro's seventh summer signing, has put pen to paper on a three-year contract at the Riverside Stadium.
Boro manager Tony Mowbray told the club's official website: "I'm delighted that he's agreed to sign for us as there was competition for his signature from within the Championship.
"I see him as young, exciting player who can give us a different dimension and option. I'm looking forward to seeing him perform for us.
"He's played his entire career so far at a lower level, but I see the potential for him to be an exciting addition to our squad and I'm sure he will excite the fans and be a player they can enjoy watching."
Carayol, who follows Christian Burgess, George Friend, Grant Leadbitter, Emmanuel Ledesma, Stuart Parnaby and Jonathan Woodgate into the Riverside, started out at Swindon, moved on to MK Dons and has had spells at Torquay, Lincoln and Rovers.