The back row forward began his London Welsh career with an unbeaten four-game loan spell from the Scarlets in January 2007, before making the move permanent the following summer.
He made his 100th league appearance for the Exiles in the club's victory at Leeds Carnegie on the opening weekend of last year's Championship season. But Mills would endure an injury interrupted season, before making a timely return to guide the Exiles through the play-offs.
In total, Mills has made 141 appearances for London Welsh, scoring 11 tries. He took over the captaincy in 2010.
Welsh, who will play in the Amlin Challenge Cup for the first time, have also signed former Sale Sharks captain and England Saxons hooker, Neil Briggs.
Briggs, 27, joined Sale in 2005 from Rotherham Titans and went onto establish himself as the club's first-choice hooker. He made his debut against Worcester in 2005 while versatility saw him also feature at flanker.
He made 104 appearances for Sale, scoring one try, during his six seasons at the club, before leaving in 2011 to join French Pro D2 side Bourgoin.
He represented England at Under 21 level and was selected in England's squad for the Under 21 World Cup finals in Argentina in 2005. He toured with the England Saxons in 2009 in the Churchill Cup and made his Saxons debut in a 28-20 win over Argentina A in Denver.
"It's going to be a big challenge, but I like that," said Briggs. "It's a chance to help a club grow "London Welsh is a club which wants to push forward and they showed that with the fight they put in to go up. I'd heard good things about Lyn [Jones] and they play some pretty attractive rugby.
Jones added: "Neil is a very experienced campaigner. He's got a lot of qualities and he'll add some stiff competition in the hooker position."