Former Leeds United striker moves back down to the Championship despite impressing in debut Premier League season, and is Sven-Goran Eriksson's 12th signing of the summer
Foxes boss Sven-Goran Eriksson had been chasing a striker late into the transfer window and had seen bids for Rangers' Nikica Jelavic and Bristol City's Nicky Maynard turned down.
Fulham had also been linked with the forward but their interest cooled once they wrapped up a deal for Costa Rican attacker Bryan Ruiz.
Beckford scored 10 times in 38 appearances for the Toffees last season and his departure may further highlight the financial woes at Goodison Park.
The 27-year-old was joined by Yakubu in leaving Everton on deadline day, with the duo replaced by Argentine striker Denis Stracqualursi.
Leicester have been by far the biggest spenders in the Championship, and Beckford has become the 12th player to join the Foxes this summer as their Thai owners look to bankroll a return to the top flight.
Paul Konchesky, John Pantsil and former Manchester City pair Kasper Schmeichel and Gelson Fernandes have been some of the big-name arrivals at the King Power Stadium this summer.