The 28-year-old, who has been without a club since leaving Bolton in the summer, will train with his teammates for the first time on Monday.
"Ipswich is a sleeping giant in the Championship. It's a massive club with a great history and tradition. The facilities are first class and there is a terrific fanbase. It's the right club at the right time for me and everything has just fallen into place," he told the club's official website.
"I had a good conversation with the manager. He's highly respected in the game for what he has achieved and I know what he's trying to do at the club.
"Ipswich may be at the wrong end of the table at the moment but it's still early in the season and I'm sure with the manager and players the club have, it's only a matter of time before things turn around."
Reo-Coker's contract will run until January.