The Premier League new boys reportedly paid a transfer fee in the region of £2.25million for the 28-year-old, who had a year left on his contract at St Andrew's.
Davies featured over 100 times for Birmingham since joining the club in January 2011 from Aston Villa.
He began his career at Luton Town before he joined West Bromwich Albion and became their second-youngest captain.
Davies then joined Villa, initially on a season-long loan in August 2007, but left at the start of 2011 following a three-month stay at Leicester City.
He said: "I'm delighted to be here.
"I feel that I'm joining Hull City at an exciting time and the chance to play in the Barclays Premier League was also a huge attraction. It's something that I've been lucky enough to do before and I wanted to get back to that level.
"Hopefully I can help this team to have a good season and push as high up the table as possible. I can't wait for Chelsea on the first day of the season now."
He was linked with Norwich City and Wolves in the January transfer window, but is returning to the top flight with promoted Hull.