The 29-year-old joined Argyle on loan in February and spent the remainder of the campaign at Home Park, helping the side preserve their Championship status.
Argyle boss Paul Sturrock had made no secret of his desire to sign Fletcher, who has penned a two-year deal, on a permanent basis and said: "Carl has great leadership qualities. He leads by example and has been the captain of Wales.
"I am delighted to have him at the club and look forward to him being an ever-present in the team next season.
"I tried to get him at the beginning of last season. He influenced the club when he came in February and, if I had managed to get him last summer, we would have benefited from that influence."