The 29-year-old, who left Oxford at the end of the season, made 157 appearances for the Pilgrims between 2001 and 2008.
That spell at Home Park came to an end after he was found guilty of causing the death by dangerous driving of two children.
Following his release from jail in June 2012 the shotstopper returned to football with Truro before signing for the U's in January.
"Although Luke made a dreadful mistake with unthinkable consequences, he has served his time and is totally remorseful," said Argyle chairman James Brent.
"While I respect others who have alternative views, from a moral standpoint, the board and I think Luke is entitled to rehabilitation.
"John Sheridan wanted to sign him and the club is totally supportive of that."
A statement on Argyle's official website revealed that, as part of the deal, McCormick will donate a significant sum of money and give his time to support a local children's charity.