With his path to first team football at Manchester City firmly blocked the deal offers the Irish left-back a chance to shine in the Championship in what has been a problem position for Forest over the past few seasons.
"It's an honour," Cunningham told the official club website when asked about his move.
A loan spell at Leicester last season was cut short through injury but, having featured recently for both City's reserves and Ireland's Under-21's, Cunningham said: "I'm raring to go."