The newly promoted club confirmed the arrival of the striker - who only arrived at the Stadium of Light in January - after failing to sign Burnley forward Charlie Austin
The 27-year-old had fallen out of favour with Paolo Di Canio after joining in January, but Steve Bruce said the striker's arrival would be a "big boost" to their survival chances in the Premier League.
Graham is delighted with his move to the KC Stadium and linking up with former Middlesbrough caretaker, and current Hull assistant manager, Steve Agnew.
"I’m delighted to be here," Graham told the club’s website. "It’s great to come to a club where everybody is on a high after winning promotion and I’ve only heard good things about this club.
"I’ve spoken to the manager here and to Steve Agnew, who I know from my time at Middlesbrough, and like I say, everything I hear is good.
"I know I’m coming to a good club with a top manager, a fantastic stadium and some very good players."
Graham notched double figures in two seasons in the Championship with Watford before a move to Swansea two seasons ago gave him his first taste of Premier League football.
And the one-time England Under-20 international is now hoping to emulate his success with a club he regards as similar to Swansea, having been told by Di Canio he was no longer needed.
He continued: "I’d spoken to the manager at Sunderland and been told that I wasn’t part of the plans.
"When the chance came to sign here on loan, I jumped at it. It’s exactly the same as when I joined Swansea a couple of years ago, a club coming up into the Premier League. The stories for the two clubs are very similar."