The move reunites Fonua with his former Hull coach Lee Radford and his contract includes options in the club’s favour for a second and third year at Castleford.
Fonua, 28, rejoined Hull in 2020 and scored eight tries in 16 Betfred Super League appearances this year.
He was a back-to-back Challenge Cup winner during his previous spell, scoring 31 tries in 58 games and being named in the Super League Dream Team at the end of the 2016 and 2017 seasons.
The former Melbourne Storm and West Tigers outside-back reached a financial agreement with Hull to leave a year early and said: “I’m really happy and excited to be joining Castleford,.
“I am happy it’s all sorted and completed.
“I’ve loved playing against Cas, it's such a competitive team.
“Going there as an opposition player to Wheldon Road it’s a little bit daunting, but an awesome atmosphere.”
Tigers are rebuilding following the departure of long-serving coach Daryl Powell and several influential players.
“For me, I think the timing has been ideal,” Fonua said.
“With Radford coming in, it’s the start of a new chapter and the new signings he’s bringing into the club – I’m really excited to be a part of it.”
He added: “One of the key factors for me signing with Cas was the relationship I have with Lee, but at the same time I see the squad he’s aiming to build.
“I think our team can do some damage and who wouldn’t want to be part of that?
“When I play under him, I feel he gets the best out of me with the way he treats me and all his players.
“He gets to know each player on a personal level. The boys want to go out and really do a job for him as well as themselves.
“It makes me want to always be at my best.”
Radford predicted the change of clubs will be a “breath of fresh air” for Fonua.
“I’m pleased for him and I’m pleased for Castleford,” Radford stated.
“I think we are getting a good person and a recognisable rugby league face.
“When he’s on, he is on and there’s not too many better around when he is.”
But Radford insisted Fonua will have to work hard to secure a place in the team.
“Mahe knows the situation,” he stressed.
“Jordan Turner was arguably Castleford’s best player last season and [new signing] Jake Mamo got Warrington’s players’ player of the year,.
“Mahe is under no illusion how difficult it’s going to be.
“Judging by how he looks at the moment, it looks like he is already knuckling down, ready to go and, in my opinion, right some wrongs and prove a few people wrong.”
Of what role Fonua will play, Radford said: “He can cover both centre and wing, but I think centre is the position he is wanting to play.
“Again, he is very aware of the challenges in front of him if he wants to nail that spot down.
“Having that competition can only be a good, healthy thing for the team moving forward.
“I think we have signed some real footy players for 2022, like Kenny [Edwards], Jake and now Mahe.
“There is some real rugby in there. I think letting them express themselves and add their bits to the squad will be crucial if we are to have some success.”