The 30-year-old former Rams trainee has signed a two-year contract, with the option of a further year.
He had one season left on his deal with Hull, who he joined from Tottenham for about £5m in 2013 before making 112 league starts for the Tigers.
"Once I got wind of the serious interest from Derby, it was a no brainer," Huddlestone told Rams TV.
"Once Derby activated [a buyout clause in Huddlestone's contract], Hull decided to come with an offer then. If Hull had come with that maybe three weeks ago, before Derby were interested, I would have signed it happily and stayed there."
Hull vice-chairman Ehab Allam told the Tigers' website: "We recently met with Tom's representatives, prior to receiving the offer from Derby to discuss a new longer-term deal on improved terms.
"I feel this stated our intention to keep Tom at the club, but ultimately the decision to leave was down to Tom and his representatives. We would like to wish Tom well for the future, and thank him for his efforts."
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Derby County have re-signed Hull City midfielder Tom Huddlestone for an undisclosed fee, believed to be £2m.