Hernandez, 27, will join up with the club on July 1.
The 6'0" Spaniard, a former Real Madrid trainee, played 140 games for Gijon, and helped them preserve their La Liga status on the final day of the season, Sporting beating Villarreal 2-0.
He confirmed he would leave the club at the end of the season, writing: "Yesterday I took off [the shirt] for the last time and I feel that these red and white stripes will be stuck to me forever.
"Very soon I will announce my new destination."
A statement on the Leicester website said: "With the Foxes set to embark upon their first-ever UEFA Champions League campaign in 2016/17, the addition of Hernandez bolsters what is an already formidable stable of defenders…
"Hernandez has built a solid reputation for himself as a ball-playing defender with an excellent ability to read the game."
Hernandez becomes Leicester boss Claudio Ranieri's second signing of the summer following the capture of German keeper Ron-Robert Zieler from Hannover.
EmoticonEmoticon