The Southampton playmaker joins Hull on what has turned into a huge day for the Tigers.
“Gaston significantly improves our attacking options and I’m delighted to welcome him to the club,” Steve Bruce told the club’s official website.
“He is yet another quality addition as we look to build on what we achieved last season.”
Uruguay international Ramirez joined Southampton for an undisclosed fee from Bologna in Aug. 2012, but in what was largely regarded as a club-record deal.MORE: Beautiful people who love the beautiful game | Transfer photos
The 23-year-old has struggled for consistent form and fitness on England's south cost, with 22 of his 45 Premier League appearances coming as a substitute.
Ramirez's arrival at the KC Stadium comes amid a busy transfer deadline day for Hull.
West Ham midfielder Mohamed Diame joined for an undisclosed fee after City smashed its transfer record to bring in Ramirez's compatriot Abel Hernandez from Palermo for an estimated 10 million pounds.
Hernandez and Diame agreed three-year deals and Bruce could still bolster his creative options with a move for unsettled Newcastle United midfielder Hatem Ben Arfa before the deadline.