Hughes has been without a job since being sacked by Hartlepool at the end of last season.
The 49-year-old failed to keep Pools in League One after taking over when they were nine points adrift in November.
Hughes had instigated a revival and secured the manager of the month award in February following a seven-match unbeaten run, but his side then failed to score in eight games and were relegated despite a four-game undefeated finish to the season.
Hughes began his managerial career with Falkirk, taking them up to the top flight and keeping them there for four seasons, his final game a 1-0 Scottish Cup final defeat by Rangers in 2009.
He led Hibs to a European place in 2010 in his first and only full season but was sacked in the October of that year after a poor run of results stretching back from the previous campaign.
The Edinburgh-born manager will take on a side sitting second in the league and still competing in both cup competitions having won five consecutive matches. Caley Thistle face Hearts in the League Cup semi-finals at Easter Road on February 2 before facing Clyde or Stranraer in the William Hill Scottish Cup the following week.
His first game in charge will be at St Mirren Park on Saturday.
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