The 23-year old midfielder will join the Brum on a three-year deal in the summer when his Caley contract expires but he admits he will leave Inverness with a heavy heart.
"It was a difficult decision and I thought about staying another year, but this is a great opportunity for me," said Shinnie.
"I just thought at my age, I will be 24 in the summer, a three-year deal in a good league like the Championship was the right decision.
"I have always wanted to test myself down south and I have a good opportunity to do that next year.
"Birmingham have always shown a big interest in me and watched me 15 times this season. I think they wanted to do something in January but, while that didn't go through, they made it known they still wanted me.
"They are a big club with brilliant training facilities, a good stadium and a great manager so they sold it pretty well to me."