The Leeds-born centre-back told the official club website: "The gaffer at Ipswich rang me and told me about Leeds. I'm not sure he would have said anything if it hadn't been Leeds, but he knows about my background and what I think about the club.
"I was made up when he told me. It's been a long time since I've been up here and my family are in Ipswich now. It was still a big decision, I think it took me 10 seconds. I've still got some family and friends up here, and they are as pleased as me.
Naylor began his career with Leeds City Schoolboys and for the club's Centre of Excellence before moving to Ipswich as a trainee.
He has gone onto make more than over 300 appearances for Ipswich and also had loan spells at Millwall and Barnsley in 2002.