Salcedo's deal runs with Toronto through 2024 with a 2025 option. Prior to joining Tigres, Salcedo, 28, played at Fiorentina and Eintracht Frankfurt. He also played at Chivas before his time in Europe.
It will be Salcedo's second stint in Major League Soccer, after having spent a time with at Real Salt Lake as an academy player and then on the senior squad from 2013-14.
He was part of Mexico's squad at the 2018 World Cup, and has 48 appearances with El Tri.
"I am excited to return to the MLS and join a team that always wants to win and compete for titles," Salcedo said. "I look forward to playing in front of Toronto FC fans, making them proud and making history with the club."
"Carlos is a fierce competitor who I have known since he was a young player with Real Salt Lake seven years ago," said TFC president Bill Manning. "He has won numerous trophies including the German Cup with Eintracht Frankfurt and CONCACAF Champions League with Tigres."
Soteldo, 24, scored four goals and 10 assists in his sole season with Toronto after being signed from Brazil's Santos FC. On the international level, he also two goals and 24 caps for La Vinotinto.