Figueroa was first brought to England by Hull manager Steve Bruce when he was in charge of Wigan back in January 2008 from Deportivo Olimpia for £500,000.
The 30-year-old, who has 95 international caps, made 200 appearances for the Latics, scoring six goals, but missed out on the FA Cup final victory over Manchester City due to a groin injury.
He is Hull's second signing of the summer following George Boyd, whose loan
move from Peterborough was made permanent last month.
Figueroa will join up with his new Tigers team-mates when they return for pre-season training in early July ahead of their Premier League return and he said: "I'm happy to be here and to be a part of the club.
"It is a big challenge for me, but it's certainly one I'm looking forward to. When the team were playing the final few games in the Championship, I paid close attention to the results because I wanted Steve Bruce to achieve promotion.
"I was happy for him to earn the success. He is a great manager, and I'm looking forward to working with him again."
Figueroa admits he had considered the possibility of a move to the KC Stadium as soon as they sealed their place in the top flight on the final day of the season, a 2-2 draw against league winners Cardiff.
He added: "I watched the Cardiff game, and after the final whistle, I turned to my wife and said, 'Hull could be an option for me next year'."