Herd, 28, arrives in the A-League after making 14 appearances for English League One side Gillingham last season.
Last year, the three-time Socceroo signed a two-year contract with Perth Glory but decided to return to England due to family commitments.
Herd has spent his entire professional career in England, most notably making 38 Premier League appearances between 2010 and 2013.
Western Sydney will play Arsenal in a pre-season friendly on Saturday and Herd will be made available for selection, the club has confirmed.
"I’m delighted to get it over the line and get signed in time for Saturday and I’m looking forward to the season ahead,” said Herd.
“I’ve had great memories in England, I’ve spent the biggest part of my career there so far but this is my next chapter and I’m fully focussed on doing well for the Wanderers."
Goalkeepers: John Hall (Injury Replacement Player), Vedran Janjetovic, Jerrad Tyson
Defenders: Jonathan Aspropotamitis, Keanu Baccus, Aritz Borda, Jack Clisby, Robert Cornthwaite, Brendan Hamill, Josh Risdon, Michael Thwaite
Midfielders: Kearyn Baccus, Roly Bonevacia, Chris Herd, Steven Lustica, Jacob Melling, Marc Tokich
Attackers: Jumpei Kusukami, Oriol Riera, Brendon Santalab, Lachlan Scott, Jaushua Sotirio
Scholarship Players: Abraham Majok (Attacker), Nicholas Suman (Goalkeeper)