The experienced versatile midfielder finished last season on loan at Championship winners Reading having moved from Portsmouth on loan in March, easing the cash-strapped south-coast club's wage bill over the final months of the campaign.
But with Pompey having suffered relegation to League One and currently still in financial turmoil, the departure of senior players from Fratton Park has become inevitable.
And Mullins, who still had 12 months remaining on his contract, has become Blues boss Lee Clark's third signing in four days after forward Peter Lovenkrands and goalkeeper David Lucas.
The 33-year-old, formerly of Crystal Palace and West Ham, can also play in a sweeper role or at right-back and has penned a two-year deal at St Andrew's.
Meanwhile, the Midlands club have confirmed Vico Hui has resigned as chairman and left his position on the boards of both Birmingham City Football Club PLC and Birmingham City PLC. Acting chairman Peter Pannu is now likely to take over.