The highly-rated 19-year-old has penned a three-year contract at the John Smith’s Stadium with the Terriers having an option to extend for a fourth year.
Terriers boss Chris Powell was delighted to beat off competition to bring Dempsey to West Yorkshire.
He told the club’s official website: “We have been able to secure Kyle’s services amid other interest in him. He has been on the club’s scouting radar for some time; the club has watched him a lot.
“He embodies the type of player that fits with the club; someone who can come in and continue to develop.
“I don’t view Kyle as a direct replacement for Conor Coady; he is a different type of midfield player and will complement the other players we already have in the central area.
“As you can see from his record with Carlisle last season, Kyle carries a significant attacking threat. He’s an industrious player with good technical attributes, ability in set-piece situations and, importantly, the desire to succeed.
“To achieve what he did with Carlisle United in League Two last season as a first year professional was very impressive and demonstrates the potential he has. He’s still learning, but we will give him the platform to keep improving.”
Cumbrians boss Keith Curle added: “We’ve said all along we weren’t going to stand in his way if the right offer came along.
“We placed trigger clauses in the contract at the value we felt was right, and that meant he would be able to talk to any club who met or bettered that valuation, should he wish to do so.
“It’s pleasing that we have been able to do things properly for him from both a football and business point of view. I think I’ve said this before, but the message we sent to Kyle was that we were more than happy to keep him here should he find that things weren’t to his liking elsewhere.
“However, I think he has found himself a good club in Huddersfield. They are good football people and they will look to progress him even further.”
Dempsey has come through the ranks at Brunton Park and featured 15 times.