Chisholm, 26, joins Sheffield after his contract was terminated following the liquidation of Bradford Bulls.
After joining Bradford in late June 2016 he made 11 appearances, scoring nine tries and kicking seven goals including a drop goal during last season’s Championship Shield final 27-16 victory over the Eagles.
Eagles head coach Mark Aston said: “I’m thrilled we have managed to bring Dane to the club.
“We have been working hard over the past few days to get a deal done, which we achieved on Friday.
“He was keen to get on a flight back to the UK as soon as possible and landed earlier this afternoon which shows his dedication and determination to begin playing rugby again.
“He’s had a tough time with everything that happened with the previous Bradford club but he has put all that behind him and his 100% committed to the Eagles.
“Some might be concerned that we may be overstretching financially by bringing Dane in and I can guarantee we are not.
“We have brought Dane in on a deal that is right for both him and the club. After the difficulties we faced last year we aren’t, and won’t, go above and beyond what the club can afford.
“We have a tight and strict budget this year, which Dane and all the other players fall into. We still have room in this budget and with 20 players signed I am still in the market for players who fit the bill and are right for us.”
Chisholm said: “It’s great to be back in the UK and to have agreed a deal with the Eagles.
“I’ve heard some really good things about the club and I can’t wait for the new season to begin and to start training with the boys.
“Tubbs (Mark Aston) met me at the airport today and we had a good, long chat about footy.
“We got along really well with each other from the get go and I’m focused on giving my all for the Eagles.”