The 30-year-old has been allowed to move on having not been selected as part of the First Team ahead of this season.
After four seasons as a Saints player, he now heads to the King Power Stadium, where he signs a two-year contract with Saints receiving an undisclosed fee.
Hammond arrived from Colchester United ahead of the 2009/10 season, captaining Saints as they lifted the Johnstone's Paint Trophy in April 2010.
He remained as Team Captain for the following campaign, playing 47 games as his side won promotion to the Championship as runners-up in League 1.
Dean scored the Club's first goal in the second tier, netting in a 3-1 opening-day win over Leeds United at St Mary's in August 2011.
He continued to wear the armband throughout the season as Southampton quickly found their place at the top of the division, helping the side to a second successive promotion.
However, increased competition from the emerging James Ward-Prowse and summer signing Steven Davis meant opportunities for Hammond were limited in the Barclays Premier League.
He returned to his first club, Brighton & Hove Albion, on loan at the end of August last year, helping the Seagulls to a place in the Championship play-offs only for them to lose out to eventual winners Crystal Palace in the semi-finals.
Hammond returned to Staplewood in the summer but was not handed a first-team squad number for the new season, leading him to look for pastures new.
He now moves on to Leicester, having scored eleven goals in 145 games during his time with Saints.
Southampton Football Club thanks Dean for his dedicated service during his four years at St Mary's, and wishes him the very best for the future.