The 27-year-old has previously played for Exeter Chiefs between 2007 and 2010 and Bristol Rugby, where he worked with current Worcester Head Coach Richard Hill and scored 326 points in 61 appearances.
A prolific points scorer, Gray will compete with Andy Goode and Joe Carlisle for a starting spot at No.10 at Sixways next season.
"We are delighted to reveal we have signed outside half Danny Gray from his spell in France with Montauban," said Hill.
"Danny has had previous spells at Bristol and Exeter and we are pleased to be able to bring him back to England. He is a consummate professional who works hard at his game and is an excellent goal kicker.
"He understands the game really well and I think he will give us a really nice balance with Andy Goode with all his experience, Joe Carlisle with real flair and Danny who has the quality to really step up for us."
Gray revealed his excitement about the move back to England and the competition for places in the No.10 jersey.
He said: "It's been quite an experience coming out to play in France and very productive, but I really appreciate this opportunity to join such an ambitious club as the Warriors.
"The reason I wanted to come out to France was to experience something new and test myself. I had spent a number of years at Exeter Chiefs, after my spell at Bristol, and I fancied a new challenge.
"It has been a different culture and language to try and master, but I feel it has benefitted my game and now I can bring that back to England.
"I like to play an open and attacking, fast style of rugby as much as possible. I really enjoyed my time at Bristol and look forward to linking up again with Richard Hill.
"I have played against the Warriors before, a couple of times in the Premiership, so know about the club," he added.
"I'm also good friends with Rob Higgitt so I've been on the phone with him to ask about the Warriors and how things are going well. Hopefully the team can now really perform in the play-offs.
"I feel that we will have a really good mix of fly halves at the club. You don't often get the chance to work with the likes of Andy Goode and learn your trade off them. I will look to pick up as much as I can.
"It will also be a good competition with Joe Carlisle who I played against him when he was on loan at Coventry and I was playing for Exeter. He is a fantastically skilful player so hopefully we can all push each other to get even better.
Watch Danny Gray in action by clicking HERE