The 29-year-old's contract with the Bees was terminated by mutual consent on Monday morning.
Grecians boss Paul Tisdale told the club's official website: "Not having a left-back secured had been the hole in our preparations so far. Craig has left Brentford and we've moved very quickly to secure him.
"I am very pleased, it's a good fit. He's the right type of player for us - experienced, good quality and a Devon boy who knows the area and has an affinity to this part of the country. In many aspects it's a good signing.
"He is a good, competent all-round player. He is a tough defender who is good on the ball, can defend and attack as well."
Woodman returns to the west country after previous spells with Bristol City and Torquay.