Giddins, 31, spent the last two seasons at Surrey, but played only six matches in the County Championship title-winning season, taking 19 wickets at 36.63.
That contrasted sharply to his 30 National League victims, at an average of less than 15.
"Joining Hampshire was an easy decision," said Giddins.
"Once they showed an interest in me I could see the potential of the club and it's an exciting challenge for me."
Giddins is hopeful of helping take Hampshire, under new Australian captain Shane Warne, back into Championship Division One after this year's relegation.
"Hampshire are playing in the wrong division of the Championship," he added.
"And the biggest challenge for me is to be able to look back next September and say that I contributed to gaining promotion.
The pace bowler played in four Tests for England in 1999 and 2000, his best performance bringing figures of five for 15 against Zimbabwe at Lord's.
Giddins began his career at Sussex before a 19-month ban for drug-taking saw him move to Warwickshire in 1998.
"He is a very good bowler with a wealth of experience," Hampshire director of cricket Tim Tremlett said.
"He still bowls at a good pace and is perfect for English conditions."