The midfielder, 23, initially joins the Shrimpers on a deal until the end of the season, with the option of a further year.
The former Norwich and Brentford man signed for the Daggers 12 months ago following a successful loan period at Victoria Road.
Spillane has been an integral part of Dagenham's side ever since, winning their player of the year award last term. He has made 27 starts and scored five goals this term, although he has not made an appearance since the 3-1 defeat at Northampton on New Year's Day.
Spillane told Southend's official website: "Dagenham have played against Southend three times this season so I've seen Southend a few times and they are one of the best teams I've seen.
"Paul Sturrock spoke to me and outlined what he wants from me and the ambitions of the club and they match mine so it was the perfect fit.
"I'm really looking forward to meeting the lads, a few of whom I already know, and getting stuck into training and matches."
Boss Sturrock added: "There were other clubs interested in taking Michael, but we're thrilled that he's decided to come here to play his football."