The 33-year-old former Birmingham City player has returned to England following a spell in Cyprus with Nea Salamina Famagusta.
Gray, who first joined the Saddlers in 2010, has agreed terms that will keep him with the League One club until January.
"We've been able to assess his fitness as we've had him training with us for the past month or so," Walsall manager Dean Smith told BBC Sport.
"Julian is a player who has done well for me in the past. He's got a great attitude and plenty of experience and quality, which will only enhance our squad."
Gray will be included in the squad for Saturday's match against Leyton Orient.