The 35-year-old attacking midfielder has signed a contract keeping him at the Walkers Stadium until the end of the season, with a view to a longer deal.
Solano has made over 300 appearances in English football with Newcastle United, Aston Villa and West Ham United. The attacking midfielder trained with the Foxes yesterday after several other clubs, including Colchester United, had shown an interest.
The Foxes are hoping that the Peruvian will be available for this weekend's FA Cup Fourth Round tie away at Cardiff.
Meanwhile, Max Gradel has handed in a transfer request after returning from his loan spell at Leeds. Boss Simon Grayson has shown a strong interest in taking the winger back to Elland Road on a permanent deal.