The Scottish government-owned company said a total of 1,658,423 customers used its airports over the last 12 months - 220,798 more than in 2015-16.
Hial operates 11 sites in the Highlands, Western Isles, Orkney, Shetland, Argyll and Dundee Airport.
Inverness, Sumburgh, Dundee and Barra airports were among its busiest.
However, passenger numbers declined at Wick John O'Groats, Campbeltown and Benbecula.
Flights to London Heathrow and Amsterdam's Schiphol Airport helped to boost passenger numbers at Inverness by more than 23%.
Sumburgh in Shetland has had a 14% year-on-year rise, while Dundee has experienced a rise of 64% -  355,667 passengers -  and Barra's beach airport had 16% more passengers.
Hial managing director Inglis Lyon said: "Overall, the past year has been one of significant growth in passenger figures across the Hial group, illustrating customer demand for our air services and the improved connectivity they provide for communities.
"Our regional airports continue to play a key role, enhancing and supporting Scotland's economy and offering great choice for leisure and business passengers.
"Our commitment is to continue to invest in our airports, and further develop our customer service as we attract new business and look to build upon the levels of growth witnessed in the last financial year in the future."
Highlands and Islands Airports Limited (Hial) has reported a 15.4% overall increase in passenger numbers in its latest financial year.