The 32-year-old spent the second half of last season on loan with former side Brighton & Hove Albion after falling out of favour under Claude Puel.
Ulloa, who netted six times during the Foxes' memorable title-winning campaign two years ago, had been closing in on a move away from the East Midlands and has now found himself a new club.
A statement on Leicester's official website read: "Since his arrival, Leonardo's contribution to the football club has been a significant one and he will remain a popular figure among players, staff and supporters alike.
"Leicester City would like to thank him for all he has given to the Football Club and wish him and his family well with the next stage in his career."
Ulloa spent four full campaigns at the King Power Stadium and was responsible for City's first goal back in the top flight during the first of those seasons.