Cambiasso spent a decade at Inter from 2004 until the start of the summer and became a cult figure at San Siro.
After an emotional farewell to the Italian giants, Cambiasso began searching for a new club at the start of the summer and has been linked to several sides across Europe.
But the 34-year-old has always been attracted to the possibility of playing in the Premier League and had been linked to Tottenham Hotspur back in January.
Leicester boss Nigel Pearson has always made his intention to sign Cambiasso clear but there were doubts that a salary could be agreed because the former Real Madrid man was earning good money at Inter.
The signing could be a significant coup for the Foxes who will be adding a man with over 50 caps for Argentina to their squad.