The former Birmingham and Coventry forward becomes the latest in a string of new arrivals at Glanford Park this month as Scunthorpe step up their bid for promotion straight back to Sky Bet League One.
McSheffrey recently left Chesterfield and had been training with Russ Wilcox's squad. He scored a hat-trick for the reserves in last week's 4-1 win against Sheffield Wednesday.
The 31-year-old began his career at Coventry, where he scored 53 goals in 162 appearances before Birmingham paid £4million to take him to St Andrew's in 2006.
He scored 20 goals in 96 appearances for Birmingham and after loan spells at Nottingham Forest and Leeds returned to Coventry in June 2010 and latterly enjoyed a spell at Chesterfield.
Scunthorpe pulled off a coup by signing fellow striker Paddy Madden from Yeovil last week, while another forward, Paul Hayes, recently returned for a third spell at the club.
The Iron have also turned Doncaster midfielder Dave Syers' loan spell into a permanent move, have added defenders Marcus Williams and Andrew Boyce to their squad and have handed a new deal to teenage winger Hakeeb Adelakun.
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