The 29-year-old scored four goals for Mick McCarthy's side in the Championship last term.
The Jersey-born forward enjoyed two fruitful spells playing for Bournemouth either side of a three-year stint with Bristol City.
"I don't see this as a drop down, I see it as an opportunity to push on and hopefully get promoted again," he said.
Pitman added: "Coming back to the south coast is nice and this is a big club, so it's something I'm really looking forward to."
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Portsmouth have signed Ipswich Town striker Brett Pitman on a three-year contract for an undisclosed fee.