The 20-year-old midfielder, who spent time on loan with Scottish side Aberdeen last season, has joined the Saddlers on a one year contract.
Marshall will team up with a former City academy teammate at The Banks's Stadium in Clayton McDonald who moved to Walsall in January.
"Clayton is a good friend and he really sold the club to me," Marshall told the Saddlers official website.
"I'm delighted to come here and have the opportunity to play at a good level.
"Now the deal is done, I can't wait to get started. Hopefully I will fit the bill."