Bolton Wanderers struck a deal with Leicester City to bring Matt Mills to the Reebok Stadium on a three-year contract on July 4, 2012.
The central defender, 25, becomes manager Owen Coyle's second signing of the summer transfer window after the two clubs agreed an undisclosed fee.
Coyle said: "Matt is a player who has a high level of experience in the Championship. We are delighted to have made this acquisition as he adds strength and quality into the mix.
"He is 25 years old and has already captained teams at this level, so we know what he will bring to the squad, both on and off the pitch."
Last season Mills made 31 appearances for Leicester having been recruited from Reading almost a year ago.
During his two-year spell with the Royals, Mills had been a virtual ever-present, clocking up 75 games between the summers of 2009 and 2011.
Just over 12 months ago he helped Reading to reach the Championship play-off final, scoring a header as they were denied promotion to the top-flight by Swansea, who won the game at Wembley 4-2.
Mills originally started out his career at Southampton, but enjoyed loan spells at Coventry City and Bournemouth to gain further experience, during which he caught the eye of scouts at Manchester City, who signed him on a deal in January 2006.
Having made two Premier League appearances for City against Chelsea and Wigan Athletic, loan spells at Colchester United and Doncaster Rovers followed for Mills before he made the permanent switch to the Keepmoat Stadium in the summer of 2008.
After a single season at Doncaster, Reading moved to secure Mills' services for £2million in 2009.
Mills' career statistics reads 226 senior appearances in all competitions, which includes 15 goals scored.