The former Parkhead favourite returns to the club five years after leaving for Saints in a £10 million deal.
He comes in as competition for Craig Gordon after first-choice goalkeeper Scott Bain was injured and ruled out for a couple of months.
The English international will wear the No.67, a reference to the year Celtic became the first British team to win the European Cup.
It’s officially the fourth time Forster has signed for Celtic as his first two years at the club were a pair of season-long loan deals from his then parent club Newcastle United.
It is understood Celtic will have the option to buy the player at the end of this deal.
Forster told Celtic TV: “I’m absolutely delighted to be here, it feels like I’m coming home and I’m buzzing to be back at this great club.
“Now, I just want to get back training and get back playing.
“Obviously, I know what the number 67 means to this great club. It’s an honour to wear the shirt and an even bigger honour to wear this number.
“I loved my time here before and I felt like it was the right number for me, I’m really proud to wear it, and I want to do my absolute best for this club.
He added: “The gaffer has always been brilliant with me, and when the opportunity came up to come back and work with him again, it was one that was too good to turn down.
“I’m delighted to be back – Woodsy is still here, and I know a lot of the lads, which is makes it feel like I’ve come back home. With that in mind, I hope I can fit straight back in.”