The 29-year-old player was released by the Buccaneers last month and he became a free agent.
This was after Phungwayo was deemed surplus to requirements following the arrival of Innocent Maela at Pirates.
New Stars head coach Luc Eymael was keen to bring the former Bidvest Wits captain to the Bethlehem-based side.
On Monday, the Belgian tactician confirmed that Phungwayo had completed his move to Stars after signing a deal with the club.
Ea Lla Koto decided against signing left-back Cheslyn Jampies, who had been training with the club.
Phungwayo has filled the void left by Bokang Tlhone, who left Stars for Wits at the end of last season.