Tootle made 18 appearances for Town last season, but his last game was a 2-0 defeat by Port Vale on 31 October.
The 25-year-old joined the Shropshire side in June 2015, having previously played 224 times for Crewe, where he mostly featured as a right-back.
"I'm delighted to get it over the line," he told the Magpies website.
"It's a big club and from what I can see, everything that's happening at the club says it's going to be successful next season."
Earlier, Shrewsbury released a statement thanking Tootle in for "his hard work and dedication".
The Liverpudlian was one of Town boss Micky Mellon's close-season signings following promotion from League Two last summer.
He was tipped two summers ago to make a move higher up the leagues, has now been linked with a move to Scotland.
Town manager Micky Mellon has so far made seven summer signings as he attempts to rebuild following their League One relegation near-miss.
He released eight players, strikers Jean-Louis Akpa Akpro and Scott Vernon, defenders Jermaine Grandison, Zak Whitbread and Mickey Demetriou, midfielder Jordan Clark and wingers Elliot Grandin and James Caton.
League Two side Notts County have signed defender Matt Tootle on a two-year contract after Shrewsbury came to a mutual agreement on his release.