"I am delighted that we have managed to sign Neil Danns; he is a quality player at this level. He is a strong, physical, creative midfielder who will give our midfield an added edge," Grayson told the club's official website.
"He is a highly experienced player who I believe will add to what we already have in midfield. He will also provide us with good versatility in a number of areas."
Bristol boss Derek McInnes was keen to keep hold of Danns but he has found his way to John Smith's Stadium as Huddersfield look to improve on their current Championship position of 17th.