It does as of a download patch in June. The HDD had to be at least 256 GB and a USB 3.0. You plug in the HDD and turn on the system. It will recognize that you have a HDD plugged in and will ask you if you want to format the HDD. You say yes and you can even name the HDD. It will become the primary HDD for your saves. You can go into the system setting and transfer your data from your internal drive to the external one. I doubt all of this will take you 2 hours to do even if your internal drive is full.
Absolutely man, and as the previous poster explained, it is a very simple process. Great feeling when I installed my 4 TB external drive, don't have to worry about space for a long time.
And, as an added bonus, it decreases loading times on several games.....for example it takes almost 15 seconds less to load Dead Rising 3, about 10 seconds less for Forza 5.....that depends on the speed of your new drive though, good luck!