The 35-year-old former QPR, Newcastle and Aston Villa defender was a free agent after he was released by Championship side Brighton at the end of last season.
Hughes, who has clocked up over 450 Premier League appearances and won 96 caps for Northern Ireland, was persuaded to join the club by former Fulham team-mate Damien Duff.
“I played a few years with Damien Duff and he spoke highly of not just the club but the people as well and said the whole experience was fantastic,” Hughes told Melbourne’s website.
“I just want to come in here and have a good season, be solid and contribute what I can to the team. Hopefully we can improve and go even further this year.”
Hughes first game for Melbourne could be against sister club Manchester City at the weekend during their pre-season tour.