The Foxes beat out interest from fellow Guadalajara outfit Estudiantes Tecos to secure Costly's signature.
The 28-year-old former Birmingham City forward confirmed the news on his Twitter account. "I'm ready for this new challenge with the Foxes," he said.
A metatarsal break has ruled Costly out of action since May 6, costing him a spot at the World Cup and a role with Romanian club Vaslui.
Atlas will hope to integrate Costly into preseason preparations immediately, along with fellow new signings Lucio Flavio Dos Santos and Lucas Ayala, according to laprensa.hn.
The move helps bring Costly's career full circle. The Honduran played in Atlas' reserve side but bounced around Mexico before making his breakthrough back in his home country for Platense. However, laprensa.hn indicates that Costly still keeps a home in Mexico, despite playing the past several years in Poland, England, and Romania.
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