Varney had just under a week remaining on the six-month deal he signed at Portman Road last summer but Ipswich boss Mick McCarthy agreed to release him early.
Brewers manager Nigel Clough, who also managed Varney at Derby, told the club’s official website: “He’s a good, experienced Championship player who we hope will help us out in the second half of the season. He plays a few different positions, wide midfield or up front.
“He’s featured for Ipswich this season and got a couple of goals as well but wanted to come back to the area and he will be a good addition to our squad.
“He gives us something different to what we have got and is a good signing for us at this stage. He only signed a six-month deal at Ipswich which is why he is available in January.”
Varney began his professional career at Crewe following a prolific spell with non-league Quorn and has also played for Charlton, Derby, Sheffield Wednesday, Blackpool, Portsmouth, Leeds and Blackburn.
? Luke Varney says coming to #BurtonAlbion will be a ‘fresh challenge’ that will keep him ‘hungry’.
— Burton Albion FC (@burtonalbionfc) January 4, 2017
He will be eligible to make his Burton debut in Saturday’s FA Cup third round tie at Premier League Watford.
A statement on Ipswich’s website read: “Everyone at the club wishes Luke well for the future and we thank him for all his efforts in a blue shirt.”