The former Derby County man becomes the first signing of new Foxes boss Peter Taylor, and returns to the Premiership two years after leaving Pride Park for St Andrews.
Rowett spoke of his delight at returning to the top-flight, saying: "I have missed the Premiership, and it would be wrong if a I said anything different."
He spoke of his sadness at leaving Birmingham, saying: "It was a good time for me, I thoroughly enjoyed it.
"I am sorry I couldn’t get the Blues into the Premiership. We went close twice, but not close enough."
The completion of the transfer will be a relief to Taylor, as it ends the last-ditch attempts of Southampton, who entered the race to land the talented full back.
