Sam Schmidt team has finished fifth or better in the series championship for the past three years, and Hinchcliffe, 27, will join the team immediately for off-season testing.
Schmidt ran Simon Pagenaud for the past seasons, but Penske signed the Frenchman last month.
In 2009, Toronto-area native Hinchcliffe drove for SPM in Indy Lights, finishing fifth in the championship. He entered IndyCar in 2011, earning Rookie of the Year honors.
His highest championship finish has been eighth, where he finished in 2012 and 2013, and his three wins came in 2013 on street courses at the Streets of St. Petersburg and Sao Paulo, as well as on the short oval at Iowa Speedway, driving for Andretti Autosport.