The 27-year-old had been exiled to the reserves at Newcastle after being criticised for a lack of professionalism by coach Alan Pardew.
"Hatem is a superb addition to the squad, and brings a lot of attacking flare," Hull manager Steve Bruce said on the club's website
"We look forward to welcoming him to the club."
Ben Arfa, capped 13 times for France, scored 14 goals in 86 appearances for Newcastle after moving from Marseille in 2011.
Earlier, Hull announced the club record capture of Palermo striker Abel Hernandez in a deal worth a reported £9.5 million.
Hernandez, 24, has joined the club on a three-year deal from the Serie A side with the option for a further year.
The striker represented Uruguay at the World Cup finals and last season scored 14 times in the Italian second tier.
“Abel is a fantastic signing and highlights just how far the club has come in such a short space of time,” said manager Steve Bruce.
“He is an exciting talent and like myself, I’m sure the supporters can’t wait to see him in action,” added Bruce.
Hull’s previous club record signing was midfielder Jake Livermore, who joined from Tottenham earlier this summer for £8m - and they later added West Ham's Mohamed Diame to their ranks for an undisclosed fee from West Ham United.
Diame, 27, played under City manager Steve Bruce at Wigan Athletic before moving to West Ham United.
Hull also recruited Ramirez later in the day on a season-long loan from Premier League rivals Southampton.
"Gaston significantly improves our attacking options and I'm delighted to welcome him," Bruce told the club website (www.hullcitytigers.com). "He is yet another quality addition."
THE VIEW FROM ITALY
Paolo Pegoraro, Eurosport Italy: "Hernadez is a central striker with great skills, notably speed and technique. He has a strong left foot and can score from any position, including headers. He lacks consistency, and can be fantastic in one game and useless for two or three. Other problems concern his personality: he's not a fighter. He's a gamble. He had a good season last year in Serie B but in 2012-13 he was poor in Serie A. He needs a new start and the Premier League could be the right place for him."
- Sports & Recreation
- Steve Bruce
- Abel Hernandez