The announcement reunites the 30-year-old left back with City manager Steve Bruce, who first signed him while manager of Wigan in 2008.
"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," he told the City website.
"I was happy for him to earn the success. He is a great manager and I'm looking forward to working with him again.
"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'," added the player, who was out of contract at Wigan.
Hull won automatic promotion on May 4 after a dramatic 2-2 draw with champions Cardiff City on the final day of the Championship season. FA Cup winners Wigan were relegated 10 days later.
Figueroa missed the Cup final at Wembley and Wigan's last four Premier League games due to a groin injury.
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