The midfielder made 53 appearances for the League Two side last season, scoring nine goals.
Manager Danny Wilson told the club's website: "We've landed a terrific signing in Conor Hourihane. He typifies exactly want we want to do in terms of the longevity of the football club and getting in players with a longer term view in mind.
"Having been captain at Plymouth for the last two seasons shows the maturity of the player. From a young age the manager at Plymouth had identified him as a leader, which is a tremendous accolade, and he is exactly the type of player we are looking for at Barnsley.
"Last season we didn't score enough goals throughout the team and definitely in midfield we struggled to get goals. Hopefully Conor will continue to score goals and add to an area we have been lacking in."
Hourihane joined Plymouth from Ipswich in 2011.