Khaled al-Rashidi, 25, will be the first Kuwaiti to play in the English leagues, and he joins from the Al-Arabi club.
"It's an enormous honour for me to be the first Kuwaiti to play in England," he told the club's website.
"I'm looking forward to the challenges that lie ahead and getting to know the Championship."
Al-Rashidi, who spent a month with Forest last summer, will join up with his new team-mates for the first time on Thursday.
Boss Alex McLeish says al-Rashidi is likely to be on the bench as cover for Karl Darlow against Birmingham this weekend.
"It will be good to look at him in close quarters, rather than watching him on video," McLeish said.
"We are hopeful he will be available to go on the bench on Saturday. Then we can integrate him in training and see what he can do."