The 25-year-old has spent the last two years with the Addicks having joined from Dagenham & Redbridge, but he has only started once in the Championship so far this season.
Injuries to Daniel Powell and Dean Bowditch have left MK Dons with a shortage of wingers, and manager Karl Robinson says that Green has plenty to offer his side.
"He is someone I tried to sign, ironically, 12 months ago this very day. He has great experience even though he's only 25," he told MK Dons' official website.
"We're very light in the wide areas at the moment but he's going to bring tremendous quality. It's quite an exciting one for us. He's somebody who'll create a lot of goals.
"We feel we've got goals in the team and hopefully he can add to the assists. He is coming here to get games but he is also coming here to prove a point to Charlton as well.
"We're in a good position, we're sixth in the League and we don't want to sit on our laurels, it's my job to keep us pushing forward and we feel we can do that with the acquisition with Danny Green."