McShane has signed a four-year contract with the Tigers to secure a permanent return to the KC Stadium after an impressive loan spell last season.
The versatile stopper made 19 appearances during the first half of the last campaign and Tigers boss Phil Brown was keen on a permanent deal back in January.
Brown has now managed to snare the 23-year-old, who joined Sunderland from West Brom two years ago.
Skysports.com revealed earlier this week that Brown had lined up another move for McShane, with the fee understood to be in the region of £2million.
The former Manchester United youngster will now look to prove his fitness to Brown after undergoing a knee operation in July.
McShane was initially expected to be sidelined for three months, but is ahead of schedule in his recovery and could soon be pushing for his Tigers debut.