The 28-year-old New Zealand Warriors prop, who played for Tonga under Saints coach Kristian Woolf, also has an option for a third year with the reigning Super League champions.
Paasi had two years left on his contract with the Warriors but was released by incoming coach Nathan Brown, the former St Helens and Huddersfield boss, after injury restricted him to just six appearances in 2020.
Woolf said: “Iggy is as good a ball carrier I have seen in the NRL and has a similar influence with the ball in hand.
“On top of that, he has a terrific skill set and offload ability along with a pre-line pass ability.
“He is the type of player that can turn the momentum of a game in your favour and he is a big defensive player too. All of which I feel will really add to our team.”
The 18 stone Paasi was in his second spell with the Warriors and missed only one game for them in 2019. He also made 54 appearances for the Gold Coast Titans from 2015-17.
He said: “I am delighted to have signed with St Helens and my family and I cannot wait to come over and start our new life in England.
“I know Kristian Woolf after playing for Tonga under him and he was a big reason why I opted to join the Saints. I want to prove myself to him and the fans, train hard and play my best.”
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