The 33-year-old has joined the club as a second overseas player for the T20 Blast.
Marsh will also cover for current overseas player Peter Handscomb in the County Championship.
Handscomb will leave Yorkshire in August for Australia’s two-Test series in Bangladesh, although the exact date of his departure is still unknown.
Marsh, son of former Australia opening batsman Geoff, and brother of current international Mitchell, has been snapped up after Yorkshire lost previous T20 overseas recruit Travis Head to Australia A duty.
Marsh arrives at Headingley next week and will debut in the opening T20 Blast game against Nottinghamshire at Trent Bridge a fortnight today.
“I’m very excited to be linking up with the club,” said Marsh, a stylish left-hander.
“I’m looking forward to meeting up with the boys and getting started.
“I’ve only heard positive things about the club from previous overseas players and can’t wait to be involved.
“The T20 is a strong competition, and I’m looking forward to contributing to some wins.”
Marsh, who was left out of Australia’s squad for the Bangladesh tour after averaging 18 in four Tests against India in February-March, has since played T20 in the Indian Premier League.
He had a solid tournament for Kings XI Punjab, scoring 264 runs in eight innings at an average of 33.
In 152 T20 career games (including 15 T20 internationals), Marsh has made 5,147 runs at an average of 39, with a strike rate of 128 runs per 100 balls.
In 127 first-class matches (including 23 Tests), he has hit 8,035 runs at an average of 40, and in 130 List A appearances (including 53 one-day internationals), he has scored 4,965 runs at an average of 41.
“I’ll be looking to bring some experience to the group and obviously some runs would be nice too,” he added.
“I’ve played in a lot of T20 competitions, and hopefully I can bring what I’ve learned over the years to the group and we can have a really successful campaign.
“I think we’ve got a really experienced team with a lot of talented players.
“Hopefully, we can get some momentum going early and put some good performances on the board.”
Yorkshire have never won the T20. They have only twice reached Finals Day: in 2012, when they finished runners-up to Hampshire, and last year when they were beaten by Durham in the semi-finals.
Their desire to improve on that record is highlighted by the signing of Marsh, whom director of cricket Martyn Moxon insists can help make the necessary difference.
“Shaun is a top player in all formats of the game, and to get someone of his calibre is a massive coup,” he said.
“Everybody has got their part to play if we’re going to be successful in T20 – we can’t just rely on one person – but he’s a high-quality player who’s had recent success in the IPL, and plenty of international experience.
“Shaun is also a good replacement for Pete (Handscomb) when he leaves for the Bangladesh tour, and he will be there as cover in the Championship.
“Shaun is available for the rest of the summer if we need him, and to have someone with his ability in both formats of the game is fantastic.”
Marsh and Handscomb – who saved a Test match against India at Ranchi in March, sharing a stand of 124 in 62 overs – can play together in the T20, but clubs are permitted to field only one overseas player in the Championship.
Handscomb has played all seven of Yorkshire’s Championship games to date, scoring 439 runs at an average of 39.9, with one hundred and two fifties.
He was also ever-present in the 50-over Royal London Cup, striking 504 runs in nine matches at an average of 63, with one century and three fifties.
Yorkshire sailed through the group stages only to lose in the quarter-final play-off to Surrey, prolonging their wait for a white-ball trophy that goes back to 2002.
However, Moxon believes they are heading in the right direction.
“We’ve been knocking on the door in white-ball cricket in the last few years and not quite won either of the competitions, so we want to try and get a T20 trophy this year,” he said.
“At the start of the tournament, with Pete, Shaun and the England white-ball lads available, we’ve got a strong looking team on paper, and we’re going to give it a real good go.
“We were obviously disappointed to lose to Surrey in the one-day cup, but, prior to that, we played some really good 50-over cricket, and all the stuff that we worked on in the winter, and talked about, we put into practice.”
As ever, there remains a fine line between elation and elimination and Moxon said: “You’ve only got to look at the England situation in the Champions Trophy.
“They played exceptionally well in the qualifying games, but then had a bad day in the knockout stages. Against Surrey, we were by no means terrible – they were just a bit better on the day.”