The 34-year-old links up with the Latics until the end of the season.
Iwelumo has four Scotland caps to his name and counts Stoke, Colchester, Charlton, Wolves and Burnley as former clubs.
"I'm delighted to be here and I'm looking forward to it," said Iwelumo. "It's good to get out and play some football, that's my drive and that's what I want to do.
"I've got a job to do until the end of the season and I'm going to give it everything.
"I'm experienced, obviously I've got to bring that in to a young squad in a positive way. They've shown just recently that they've got the team spirit, the endeavour, work rate and all that in the right way - the right philosophy and right ethos of how to play.
"I've played against Paul many a time back in the day and he's a legend in his own right. I'm sure I'll learn a lot from him - he's quite a vocal and opinionated man and that's sometimes the best way to be."
Dickov added: "Chris will be a fantastic signing for us for lots of reasons - his experience, his know-how and what he brings to you on and off the pitch.
"It looks like Matt Smith is going to be out for a few weeks and Robbie Simpson as well, so it was important that we brought a striker in but a striker with experience, who knows the division and can score goals in this division."
Oldham have also signed Reading winger Jordan Obita.
The 19-year-old moves to Boundary Park on a one-month emergency youth loan subject to Premier League and Football League clearance.
Obita has enjoyed temporary spells with Barnet, Gillingham and Portsmouth, and he was sent off against Latics while playing for the latter in September.
ALL THE DEADLINE DAY MOVES
Ben Chorley (Leyton Orient to Stevenage, free)
Barry Robson (Vancouver Whitecaps to Sheffield United, free)
Jonathan Forte (Southampton to Sheffield United, loan)
Chuks Aneke (Arsenal to Crewe, loan)
Chris Iwelumo (Watford to Oldham, loan)
Jordan Obita (Reading to Oldham, loan)
Shaun Batt (Millwall to Leyton Orient, loan)
Patrick Bamford (Chelsea to MK Dons, loan)
Lee Barnard (Southampton to Oldham, loan)
- Sports & Recreation