The 34-year-old, who has won 110 caps for the Republic of Ireland, ended last season on loan at Huddersfield Town.
The Irishman said: "It's an initial loan move and I'm just happy to get up and running and join such a great club.
"I'm thinking short-term. I think I can do a good job and maybe I'll see what happens long-term but football can change very, very quickly."
He becomes Rams manager Nigel Clough's ninth signing of the summer.
"Kevin brings with him a wealth of experience, as well as the ability to play in a variety of positions," said Clough.
"He is an international footballer, so first and foremost it is exciting for us to attract another player of that ilk to Derby County."
The former Preston, West Brom, Sunderland, Everton and Wigan player made 31 appearances for the Terriers last season.