Hussey, who helped current side Gloucestershire win the C and G Trophy on Saturday, led Northamptonshire to promotion in both the County championship and the One-day National League in 2003.
The left-handed opener has accumulated almost 13,000 first class runs, and last year averaged 89.30 in the English game.
Hussey explained his decision to choose division two side Durham ahead of other teams interested in securing his services.
"It is flattering that there has been a lot of interest from various Counties," said the 29-year-old Western Australian.
"However, when I visited Durham I saw for myself what an ambitious and progressive club it is.
"There is no doubt in my mind that this is where I want to be playing cricket."
Durham coach Martyn Moxon added: "Mike embodies the type of player we needed to bring into the team.
"He is a top order batsman who will be a real asset. His experience will offer great leadership to the younger members of the squad."
"We expect him to be available for selection throughout the year, which will also give us continuity in the dressing room."