The 29-year-old has been a free agent since leaving Italian champions Juventus at the end of the 2015-16 campaign, meaning that he is able to join outside of the transfer window.
"I am very happy to have signed for what is an important club in English football. I am looking forward to getting started with my new teammates," he told the club's official website.
"Of all of the options that I had, I think that the best option for me was to come to Southampton. I am extremely happy to have joined this club."
Executive director of football Les Reed added: "Recruiting players in January is an extremely difficult task, and this year was a particularly challenging market for centre-backs. We set out to recruit a high-calibre player in that position during the January window so I am delighted that, following extensive work and persistence, we have now been able to sign Martín Cáceres on a short-term contract.
"Martin is a great talent, who has played at the very top level and won many trophies and medals. He is a very experienced international player for Uruguay and has enjoyed notable success with both Juventus and Barcelona. In a tough situation for us, losing Virgil to injury, he will bring experience, talent and character. He has played in the biggest of games, and will provide depth to our squad.
"Two days of extensive medicals and tough fitness tests have further demonstrated his desire and positive personality. I know Martin can't wait to start playing again. We welcome him to St Mary's, and his family into our family."
Caceres, who has 68 caps for Uruguay, has won La Liga, the Champions League, five Serie A titles and two Coppa Italia crowns during previous spells with Juve and Barcelona.