Neill, who is eager for regular football after being deemed surplus to requirements by Dubai-based club Al Wasl, has agreed terms with the Sky Blues for the remainder of the current season.
"I'm a Sydney boy and I’m excited to be coming back to Australia to play club football in front of friends and family with Sydney FC," Neill said.
"I worked with (coach) Frank Farina for many years in the Socceroos and I look back on those times with good memories, and it’s great to have the chance to enjoy further success together at Sydney.
"Hopefully the team can get a win today and I look forward to meeting my new teammates tomorrow."
A big factor in Neill's decision was the opportunity to work with former mentor Farina.
"We’re thrilled Lucas has joined Sydney FC," Farina said.
"He is the current Socceroos captain and one of Australia’s most decorated players but more importantly he is a tremendous defender and he will make a valuable contribution in the run in to the semi-final series."
Sydney-born Neill was tipped to join former Socceroos teammate John Aloisi's Heart but the Victorian club is believed to have baulked at the defender's wage demands after meeting the player on Friday.
Neill, who will be 35 in March, told Heart on Saturday that he had decided to join Sydney which is bankrolled by Russian billionaire David Traktovenko.
Neill will begin training on Sunday and ironically his first A-League game could be against Heart at AAMI Park next weekend.
Meanwhile, Sydney and marquee striker Alessandro Del Piero are also expected to rubber-stamp their deal that will take the Italian World Cup winner to his second season in the A-League.
Del Piero, contrary to media reports, has a two-year contract whereby one of the two parties has an option to bale out after the first year.
The player has said publicly he was happy in Sydney and the club is satisfied with his contribution so there is nothing to stop Del Piero from playing on next season, barring agrreement on a few minor marketing details.
The news comes a day after it emerged that midfielder Nick Carle is expected to return to Sydney FC after his loan period with Abu Dhabi-based Baniyas expires on 30 June.