The versatile defender and midfielder, 25, arrives at St Andrew's having been released by fellow relegated side West Ham at the end of last season.
Spector, a USA international who has spent the past five years at Upton Park following a move from Manchester United, underwent a medical at Blues on Monday before putting the finishing touches to a two-year contract, adding much-needed depth to Chris Hughton's new-look side in the Championship.
Birmingham, who are working under tough financial constraints following May's relegation from the top flight, have already captured Chris Burke, Marlon King, Morgaro Gomis, Adam Rooney and Steven Caldwell all on Bosman free deals. Goalkeeper Boaz Myhill has also joined on a season-long loan.
West Brom's Myhill was part of the deal which saw Ben Foster head in the opposite direction to The Hawthorns on a similar arrangement, while the likes of Craig Gardner, Roger Johnson, Sebastian Larsson, Barry Ferguson, Lee Bowyer and Kevin Phillips have also departed.
There are likely to be further casualties before the close of the transfer window on August 31, with prized centre-back Scott Dann, fellow defender Liam Ridgewell and strikers Cameron Jerome and Nikola Zigic all linked with moves away from the Midlands club.