Simon Grayson told Leeds' official website: "Shane is a very experienced goalkeeper and he ended last season on loan at Wolves, who held him in very high regard.
"He's desperate to make an impression and has the hunger and the desire to succeed at this football club. He is another player who we've signed, and are looking to sign, who has the experience of this division and the know-how to help us achieve our goal of promotion."
Higgs began his career at Bristol Rovers and also had a spell at non-league Worcester City.