The 29-year-old Wales international becomes Wigan’s seventh summer signing and has flown out to Spain to join with the rest of the squad on their summer training camp.
Wigan manager Gary Caldwell told the club’s official website: “Craig’s a powerful striker who has a proven track record in this division.
“He’s an experienced player who will inspire those around him and we are absolutely delighted he has chosen to be with us.”
The much-travelled Davies began his career at Manchester City and has had spells at Oxford, Wolves, Oldham, Stockport, Brighton, Yeovil, Port Vale, Chesterfield, Barnsley, Preston and Bolton.
Wigan had previously signed David Perkins, Richard O’Donnell, Craig Morgan, Donervon Daniels, Max Power and Sanmi Odelusi since they were relegated last season.