Giuly, 36, dropped down to Ligue 2 last summer to sign for Monaco - with whom he reached the Champions League final in 2004 - but was unable to command a regular place following the arrival of Claudio Ranieri as manager.
The veteran will have another chance to play in Ligue 1 in 2012-13 after Lorient snapped him up, however, with the club's president Loic Fery delighted to land Giuly.
"He fits the profile of player we wanted: he has played for big clubs, he will give us the experience and character that we were lacking last year," Fery said.
"Ludovic is a great professional, with a good mentality. I was impressed by his willingness to come here. I have no doubt about what he can bring.
"Ludovic does not come with a guaranteed starting spot, he comes because he wants to contribute to the progress of the club."
Giuly, who has enjoyed a distinguished career playing for Lyon, Monaco, Barcelona, Roma and Paris St Germain, says he is happy to back in the French top flight.
"It's a club that suits me because they take joy in the way they play the game here," he said.
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