The 29-year-old has been a free agent since being released by French top-flight club OGC Nice last season following a disappointing spell.
Barkley bagged four goals and two assists in 28 appearances for the club across all competitions.
He will be hoping to play a vital role for the Hatters this season, with top-flight survival the primary objective for the Premier League newcomers.
Barkley said: “Going from the Conference to the Premier League is a great story. For me personally to be back in the Premier League, it’s great motivation.
“I’m still relatively young, and over the last couple of years, I’ve not played as much as I’d have liked. But I’m ready and feeling motivated.”
Town manager Rob Edwards added: “Ross brings loads of experience at the top level, has international experience and brings an X-factor.
“He gives us something different – he has that ability to make something out of nothing, and we need that in the Premier League. He’s got all the tools required to make a difference for us.”
Barkley arrives at Kenilworth Road with a wealth of Premier League experience under his belt.
He has amassed over 200 appearances in the English top flight from his time at Everton, Chelsea and Aston Villa, registering 29 goals and 31 assists.
Barkley has come a long way from being touted as a generational talent during his early days at Goodison Park.
Despite his massively underwhelming career, he will hope to reinvent himself at the Bedfordshire club and establish himself as a central figure in Edwards’ plans.
Town kick off their debut Premier League campaign when they take on Brighton & Hove Albion at the Amex Stadium on Saturday.
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