The 32-year-old Ferrari made 11 appearances for Italy from 2002-04, and played at Inter Milan, Genoa, Parma and Roma in Italy and Everton in England. He made more than 200 Serie A appearances, and 22 more in the Champions League.
"We are extremely pleased to add a player of this quality to our team," said Impact coach Jesse Marsch. "He has already fit into our group in a very good way and we believe that his experience and leadership make us stronger."
Ferrari most recently played for Turkish side Besiktas from 2009-11. He joined the Impact last month for preseason training, and secured a contract with the expansion club.
"I'm very happy for this opportunity to play an important role with the Impact in its inaugural season," said Ferrari. "I hope to help this team progress and succeed in its first campaign in MLS.
"I've only been here a short time, but I'm happy with the organization. The coaches and the players have been great to me."
Per Major League Soccer and club policy, terms of the deal were not disclosed.
Montreal kicks off its inaugural season March 10 at Vancouver Whitecaps FC.