"DJ is a player who we have been chasing for some time and, after long and exhausting negotiations, we are delighted to have completed the deal," said Leicester chairman Milan Mandaric.
"This is a signing that really excites me and I believe he will be a great acquisition for Leicester City Football Club. He has great pace and he scores goals."
Campbell joined Birmingham in January 2006 from Brentford and scored 12 goals in 50 appearances for the St Andrew's club.