The 36-year-old was released by Leicester at the end of last season and becomes Pools boss Neale Cooper's third summer signing.
Howard, who started his career with Pools in 1995, has been involved in two £1 million-plus transfer deals during his 17-year playing career.
He moved on from Hartlepool, for whom he scored 32 goals in 162 appearances, to Northampton for £120,000 in 1999 and then scored 96 goals in 212 appearances during a five-year spell at Luton before Derby paid £1m to take him to Pride Park in 2006.
Howard was top goalscorer for Derby when they secured promotion to the Premier League and moved on to Leicester following an initial loan spell for £1.5m in January 2008.
Cooper made Howard his top transfer target once Leicester announced he would not be getting a new contract and he follows Jonathan Franks and Simon Walton to the club.