The 37-year-old Thorn moved to Japan after the All Blacks won the World Cup then signed a short-term contract at the conclusion of the Japanese season with Irish side Leinster, helping them to the Heineken Cup title in May.
"Brad brings a great deal of professionalism to any team he plays for," Highlanders coach Jamie Joseph said.
"His work ethic, experience and leadership will add a great deal to our team and have a very positive influence on the younger players.
"Brad is a very competitive athlete and from what I saw in Japan recently he is still playing rugby at an international standard."
Thorn follows fellow World Cup winner Ma'a Nonu to the Highlanders after the inside centre said earlier this week he had walked away from the second year of an Auckland Blues contract.
All Blacks prop Tony Woodcock has also said he will be leaving the Blues to join the Highlanders.
The trio join current All Blacks Hosea Gear, Andrew Hore, Aaron Smith, Ben Smith and Tamati Ellison in Dunedin with Joseph quietly building a squad that looms as an early favourite for the Super Rugby title next year.
Thorn was born in Mosgiel, near Dunedin, but left New Zealand to carve out a successful rugby league career with the Brisbane Broncos and Australia.
He returned to New Zealand to play rugby union and made the All Blacks 2003 World Cup squad before he left again for a second stint in league.
He returned to New Zealand in 2008 and re-established himself in the All Blacks side which ultimately beat France to win the World Cup at Eden Park last year.