The 29-year-old has been a free agent since leaving Italian champions Juventus at the end of last term.
The 29-year-old -- capped 68 times and a member of the team that won the 2011 Copa America and reached the 2010 World Cup semi-finals -- has been a free agent since leaving Italian champions Juventus at the end of last term.
Caceres, who was troubled by an ankle injury in 2015 and then a ruptured right Achilles tendon last year, said he had picked Saints ahead of other unnamed clubs.
"I am very happy to have signed for what is an important club in English football," he said in a statement released by the club.
"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," added Caceres, who won five Serie A crowns with Juventus having also won a Spanish league title with previous club Barcelona.
Les Reed, Southampton's executive director of Football, said he was pelased to have secured a defender capable of filling the gap left by the departure of Portuguese international and club skipper Jose Fonte to rivals West Ham in January.
Their star defender Virgil van Dijk has also been sidelined with an ankle injury which has ruled him out of the League Cup final later this month.
"Recruiting players in January is an extremely difficult task, and this year was a particularly challenging market for centre-backs," said Reed.
"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."