The Carmarthen born player has made 149 appearances for the Men of Gwent and his debut came in 2007 against Scarlets.
Prior to his time at the Dragons he captained Wales U20s in the 2007 Six Nations, whilst playing his part in the Scarlets pack.
Once he made his move the the Dragons, the West Walian was an immediate success as he notched up 21 appearances for the Dragons during his first season.
Throughout his time with the Region, Gustafson has made appearances for Ebbw Vale, Bedwas, Pontypool, Cross Keys and Newport RFC.
The experienced hooker recently took on the role of skipper for the Newport Gwent Dragons Premiership Select for the duration of the British and Irish Cup tournament.
Gustafson commented: “I would like to begin by thanking everyone at the Dragons who gave me a chance when I was younger. Its coming up to ten years since I started at the Region and I have thoroughly enjoyed my time here.
“When the opportunity came up for me to join Ospreys I felt that it was the right time for me to move on and take my chance with another team. I hope to learn new things during my time there and get an all round different experience.
“Before the end of the season I would like to get as much game time as possible and hope to make it to 150 appearances before my time is up at the Region."
Dragons Director of Rugby, Lyn Jones added: “I think that it is a great move for Hugh Gustafson.
“He has been a loyal servant for the Region during his time here and we wish him well for the future."