The 24-year-old former Blackrock College centre has represented Ireland at Under-19, Under-20 and Sevens level.
He was part of the 2007 Ireland Under-20 Grand Slam-winning team alongside current Connacht players Andrew Browne, Paul O'Donohoe, Thomas Anderson and Niall O'Connor.
A former pupil of St. Gerard's School in Bray, Tonetti joined the Leinster Academy in 2007 and spent two years professionally contracted to the province, making three senior appearances - the last of which was against Connacht in April 2010 - and also earning 21 Leinster 'A' caps.
His new contract will see him play at the Sportsground until at least the end of the 2011/12 season.
Speaking about the signing, Connacht head coach Eric Elwood said: "I'm really looking forward to working with Kyle again, having known him since the 2007 Under-20 team that won the Six Nations.
"I'm sure he will fit nicely into the squad. We're looking forward to him joining up with the team and working with him again."