The goalkeeper, who played for Hibs as a trialist during Sunday's friendly against Dundee United, is excited by the challenge that awaits him in the Scottish capital.
Oxley told the club's official website: "I'm really pleased to sign on loan with Hibs - it's a big club with a positive atmosphere around the place and I'm excited about the future.
"As soon as I spoke to the manager, I quickly realised that Hibs are a club going in the right direction and I wanted to be a part of it.
"This is a great opportunity for me and I'm determined to seize my chance by helping Hibernian to win as many games as possible and to get the club back into the Scottish Premiership."
The 23-year-old, who has yet to start a game for Hull, made 43 appearances for League One Oldham Athletic during a loan spell last season.
Hibs boss Alan Stubbs said: "We're delighted that we've managed to bring Mark to Hibernian - this loan deal has been in the pipeline for some time and it's great that we've managed to get it over the line.
"This move suits everybody - we were looking for a new first-choice goalkeeper and Mark was looking for a fresh challenge and an opportunity to play regular first-team football.
"Mark showed last season with Oldham that he is an excellent young goalkeeper and his move here provides him with the perfect platform to continue his development.
"Everybody was aware that filling this position was a priority and, after thoroughly scouring the transfer market, Mark was the stand-out choice and his arrival here is another positive step in the right direction."