The Papua New Guinea international will make the switch to Wheldon Road at the end of the season.
In-form Low has scored 33 tries in 28 games for his Championship club this season and duly impressed Castleford head coach Daryl Powell.
The player’s strike rate has been high-quality wherever he has played.
He was PNG Hunters’ top try-scorer during their inaugural season in the Queensland Cup in 2014 and also crossed 12 times in 16 games during his debut campaign with Sheffield last term.
Lo, 23, said: “I am speechless. To be given this opportunity is a dream come true for me.
“To get the chance to test myself at the highest level in Super League is so exciting and I can’t wait to join the boys soon for pre-season training.”
Castleford have an option for a third year on Lo’s deal and it has been agreed he will return on loan to Sheffield in 2018 when not required by the Tigers.
Powell has had success mining quality players from the lower divisions with winger Greg Minikin, in particular, scoring more than 20 tries this term less than two years after joining from York City Knights.
He said: “Garry Lo has been a really exciting player for Sheffield over the last two years. I’ve had a good look at him and think he will fit perfectly into the way we play.
“He’s an exciting player, he’s very robust and a strong ball carrier who’s got an ability to pass the ball as well, so I think he’ll be a very exciting player to add into what we have already got.”
Lo is in the Sheffield side that heads to Batley Bulldogs tomorrow for their Championship Shield semi-final and will also represent Papua New Guinea in the World Cup this autumn.
Castleford chief executive Steve Gill, who has arranged a pre-season friendly with Sheffield, added: “Gary is an excellent prospect, and at 23 years old he is a perfect age to move up into Super League from the Championship.
“I believe in time he will become a fans’ favourite, and Garry gives us real strength in depth on the wings.”