Payne was on the radar of a number of clubs - including Championship rivals Wolves and Ipswich Town and Dutch outfit Sparta Rotterdam - with Town winning the race to secure his services.
The 21-year-old was a free agent after seeing out his contract at Roots Hall and turning down a new deal.
Due to his age, Southend will be entitled to compensation for Payne, who becomes Town’s fifth major signing of the close season.
The Londoner impressed in scoring nine goals in 35 appearances for Southend last term and 17 goals in 87 matches during his time in Essex.
Town have already brought in Oldham keeper Joel Coleman, Croatia-born midfielder Ivan Paurevic and German defenders Chris Lowe and Michael Hefele.
Ex Middlesbrough keeper Luke Coddington has been added to the club’s development squad, while Jonathan Hogg, Martin Cranie and Mark Hudson have all signed new deals.
On Payne, who will officially join on July 1, head coach David Wagner said: ’It’s great that we’ve been able to bring a player like Jack to Huddersfield, as many clubs were understandably interested in him.
“In my opinion he is probably one of the most interesting young British midfielders in the country and I am proud that we will have the chance to help him to develop his potential to his highest level in the future.
“Quality ‘number 10s’ are, in my opinion, the hardest players to find and it is not regular that players of Jack’s quality become available.
“Jack is already excellent technically and has a great record of scoring goals, but at just 21 he has lots of room to develop further. His desire to improve was very clear from our very first meeting and he will do that with us in the Championship.
“We will work hard with him in pre-season as he comes to understand our ideas and style on the pitch and I am sure he will be a big part of what we do in the coming season.”