The 22-year-old Irishman has penned a three-year deal at Ewood Park and fills a position of need which Gary Bowyer has looked to solve since Scott Dann's departure last January.
Duffy, who made 10 senior appearances at Goodison Park, was a product of the Toffees' Academy system and spent spells on loan with Burnley, Scunthorpe and Yeovil.
Speaking to the media after Saturday's defeat to Wolves, Bowyer said: "Shane will bring a lot of size and quality and we've known about him for a long time from watching him at youth level at Everton.
"He's dominant in both boxes, especially in the air."
Rovers had yet to keep a clean sheet this season and Bowyer could hand Duffy a debut against Wigan on September 13 after the international break.