The striker will continue in the German Bundesliga after securing a permanent deal with Julian Nagelsmann's side until June 2022.
The 26-year-old enjoyed season-long loan with Werder Bremen where he scored six goals in 29 appearances across all competitions.
Belfodil becomes the second player to join the Rhein-Neckar-Arena outfit, set to play in the Uefa Champions League next season after they finished third in the German top-flight.
“Following the signing of Leonardo Bittencourt, TSG Hoffenheim have completed their second piece of summer business. Algeria international Ishak Belfodil has joined the club and signed a contract running until 30th June 2022,” the club tweeted.
💙 | #TSG WELCOMES #BELFODIL— TSG Hoffenheim EN (@achtzehn99_en) May 15, 2018
Following the signing of Leonardo #Bittencourt, TSG #Hoffenheim have completed their second piece of summer business. Algeria international Ishak #Belfodil has joined the club and signed a contract running until 30th June 2022. pic.twitter.com/nSkjWtlYhl
Prior to his loan move to Werder Bremen in August 2017, the former Algeria international scored seven goals with six assists in 40 appearances for Standard Liege.
“Happy to join Hoffenheim and looking forward to starting the season with my new teammates and staff,” Belfodil wrote on Instagram.