Pietersen had been linked with the Stars earlier this year and the move was finally confirmed on Monday.
The South-African born batsman becomes the team's second international player, replacing paceman Lasith Malinga - who has been ruled out of the tournament due to his Cricket World Cup preparations with Sri Lanka.
The 34-year-old, exiled by the England and Wales Cricket Board in February, said it was an easy decision to make.
"I'm very excited about joining the Melbourne Stars and look forward to playing with some of Australia's best T20 cricketers," Pietersen said.
"Joining the Melbourne Stars was an easy choice for me when you look at the players we have and the amazing off-field support staff, and don't forget our home ground, the MCG."
Pietersen joins Englishman Luke Wright as the Stars' international players.
And Stars coach Greg Shipperd believes the hard-hitting batsman will enjoy the Big Bash League.
"We are delighted to have Kevin as a Melbourne Star," he said.
"He's a proven competitor and I am confident that he will revel in the fiercely competitive atmosphere of the BBL and will be especially at home at the MCG in front of our loyal members."
The Big Bash League starts on December 18, when Pietersen's Stars travel to Adelaide to face the Strikers.