The 23-year-old full-back has joined the Championship outfit on a three-year contract, as reported by BBC Sport.
Davidson was released by Premier League club West Brom at the end of the 2014-15 season, which means that he has moved to Huddersfield on a free transfer.
The Australia international, who joined West Brom from Heracles Almelo in the summer of 2014, is delighted to have moved to the Terriers and has posted the following message on Twitter:
Davidson struggled for playing opportunities at The Hawthorns during the 2014-15 campaign, making just two appearances in the Premier League.
West Brom finished 13th in the Premier League last season with 44 points from 38 matches, nine points above the relegation zone.
Meanwhile, Huddersfield ended up 16th in the Championship table with 55 points from 46 games.