The agreement is reportedly for two years.
"I am very excited and happy to be here," Oden said. "I'm thankful to the Miami Heat organization for bringing me in and I'm ready to get to work."
"After many months of discussion, evaluations and speaking with Greg, we felt it was the perfect time for him to make his comeback and re-enter the NBA with the Miami Heat," team President Pat Riley said.
Oden, 25, was taken by the Portland Trail Blazers with the first selection of the 2007 draft. He had left Ohio State after one season. The Buckeyes had advanced to the NCAA Tournament title game with Oden.
However, since signing with Portland, Oden has appeared in only 82 games due to a series of injuries. Oden hasn't played in an NBA game since Dec. 9, 2009. The Trail Blazer released him in March 2012.
The 7-foot center averaged 9.4 points and 4.5 rebounds in his NBA career.
Oden has had three microfracture surgeries on his knees, most recently on Feb. 20, 2012.