The 20-year-old spent the first half of the season on loan at Sky Bet League Two side Hartlepool, where he made 25 appearances.
Bantams boss Phil Parkinson told the club's official website: "We've been making changes to the squad recently and Matty Dolan will be another one of those when he comes in.
"I believe he will be a good addition for us, especially with Ricky (Ravenhill) going.
"Matty will add some quality into the midfield area. He has a good mentality as well. He is eager to learn and eager do really well here at Bradford City. He has real desire to his game.
"He also has a terrific left foot and the ability to pick out a killer pass.
"I felt we needed fresh legs in central midfield and Matty should give us that."
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- Phil Parkinson