The 40-year old was released by Crystal Palace earlier this month and he will now suit up for the Foxes until the end of the 2013/14 season.
Nigel Pearson was delighted to bring the former Watford, Sunderland, Southampton, Aston Villa, West Bromwich Albion, Birmingham City, Blackpool back to the Midlands where his Leicester side sit on top of the Championship table.
"The opportunity to sign a player of Kevin's experience and know-how doesn't come along too often so I'm delighted that we've been able to add him to our squad," said Pearson who managed Phillips at Albion.
"He's a player I know well, he's a fantastic professional with multiple promotions to his name and he will bring some great qualities to the group, both on and off the pitch."
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