The 24-year-old, who scored 12 tries in 54 appearances for the Saracens, will become an Exiles player following a loan stint at London Wasps.
"I have thoroughly enjoyed my time at Saracens and winning the Premiership in 2011 was a real highlight," Short told the club's official website. "However, I feel it is time for a new challenge and the chance to join London Irish is a perfect opportunity for me."
Director of rugby Brian Smith added: "James has a huge amount of Premiership experience for a 24-year-old. He is extremely talented, a great finisher and an ambitious player who will be a huge asset to our squad."
Short made his debut for Saracens in November 2010.