Gudjohnsen has welcomed the chance to return to the English game where he had successful spells with Bolton Wanderers and Chelsea, as well as a loan spell at Tottenham last season when he made a big contribution to their win at the Britannia Stadium.
"This is a fantastic signing for the Football Club because Eidur is a player of outstanding international calibre who has performed at the highest level," Pulis told the club's website.
"There is no better example of the quality he provides than his contribution to Tottenham's win here in April. Not only did he score an excellent goal, he showed what a great footballing brain he has and his sense of awareness with a key role in their winner.
"Eidur made a significant contribution to Spurs qualifying for the Champions League and I am confident he can have a big impact upon our season.
"He certainly brings more goals to the squad, following the arrivals of Kenwyne Jones and Jon Walters, which was an important aim in this transfer window and I am delighted we have brought these three players in, together with Marc Wilson."