The 24-year-old moves from the Terriers to Turf Moor on a free transfer after a successful trial.
Former Scotland Under-21 international Arfield made 119 appearances and scored nine goals during three years at Huddersfield.
Clarets boss Sean Dyche told the club's official website: "Scott is a player with a good background who came down from Scotland a few years ago and is a really good talent.
"He joined us in pre-season and valued the chance to work hard here.
"That has deservedly rewarded him with a contract and we hope he continues to build here and turn into a really valuable player for us."