The 25-year-old has departed Kilmarnock after finishing last season on loan at Blackpool.
"I think we're very lucky to have Shaun Hessey here at Chester," Blues boss Mark Wright said.
"I think he should be playing a lot higher in football, but he wants to play for us, he partly wanted to come to Chester because I was here.
"I've seen Shaun play many times in the Scottish Premier League and I was impressed with what I saw.
"He's played against Rangers and Celtic for Kilmarnock and he has two very good feet.
"I think Shaun has bags of ability. He is 6ft 1in tall and he can play either as a centre half or central midfielder in a holding role.
"Shaun has a lot of talent but we need to acclimatise him to life in the Football League."
Chester have now landed eight new players this summer following the arrivals of Hessey, Chris MacKenzie, Stephen Vaughan, Richard Hope, Stewart Drummond, Andy Watson, Michael Branch and Cortez Belle.
They are also being linked with a move for Stockport County wing back Kevin Ellison, who Lincoln City failed to sign last month.
Wright is also looking at former Yeovil Town star Jamie Gosling and ex-Swansea City winger Stuart Roberts.
"Gosling is a good runner and I like players who are fit and mobile like him," said Wright.
"Roberts is very quick and we are having a good look at both of them."
The club have also confirmed the release of Jamie Heard and striker Ian Foster.
