Hutton, 28, will be the last defender to be brought in by the Islanders this summer, as they put the finishing touches to their squad ahead of the new season.
The Scotland international, who found himself out of favour at Aston Villa, moved to Mallorca on loan last season.
And although the full-back was unable to save the side from the drop, he has decided to commit his future to the club, returning on a free transfer after being released by Villa.
Following a short loan spell at Nottingham Forest last term, Hutton then joined Mallorca in January.
He instantly earned himself a place in the starting XI, making his debut against Real Sociedad in a 3-0 defeat, before going on to make a further 16 appearances.