Hill, who has a glistening career with names such as Bristol City, Queens Park Rangers and Wolverhampton Wanderers on his CV, will assist Alex Meechan in his role as head coach, and also register as a player.
The 35-year-old left-back joins the club from Tranmere Rovers, making forty-seven appearances in two seasons, including thirty-one in the National League last term.
His career has seen him make 452 appearances in the Football League, including two in the Premier League for Wolves in 2009.
The defender started his career at Bristol City, where he made his debut aged 17 in 1998.
He went on to establish himself as a regular at Ashton Gate, making 246 appearances in all competitions and spending three years playing alongside Meechan.
Preston North End paid £100,000 for Hill's services in 2005, taking him into the Championship for the first time.
In five years at Deepdale, Hill made 119 appearances before commanding another transfer fee as he was signed by Mick McCarthy's Wolves.
He played fourteen times as they gained promotion to the Premier League and lifted the Championship trophy.
Having made just two appearances in the top flight, Hill spent the second half of the season on loan at QPR, before joining Barnsley at the end of the campaign.
A year at Oakwell was followed by a year at Blackpool's Bloomfield Road, before Hill joined Sheffield United, where he made ninety-five appearances in three seasons ahead of his move to Tranmere in 2014.
In total, he has made 567 career appearances, scoring nine goals.
He has played at the Horsfall Stadium before, starting for Bristol City in the FA Cup First Round tie in 2003, which the visitors won 5-2 in front of 1,945 spectators.
Hill becomes Avenue's sixth new signing of the summer, and will also take up a coaching role alongside Meechan in the club's newly formed academy.