The 25-year-old will compete with Craig MacGillivray for the No 1 jersey following the departure of player of the year Richard O’Donnell in May.
Etheridge started out at Fulham and had loan spells at Charlton, Bristol Rovers and Crewe before he moved on to Oldham in October 2014. He re-joined Charlton on a short-term deal in January to the end of last season.
“We had a number of good options but Neil really stood out,” manager Dean Smith told the club’s official website.
“He ticks all the right boxes in terms of age, room for further development and experience at this level and above.
“He is an extremely driven young man who wants to be successful and these are the characteristics that we are looking for.”
Etheridge added: “It’s fantastic to be here. The faith that the gaffer and (goalkeeping coach) Neil Cutler have shown in me means a lot.”