Godin signed a three-year deal with Inter Milan when he joined on a free transfer from Atletico Madrid last summer.
The 34-year-old Uruguay international made 36 appearances in all competitions for Antonio Conte’s side in his only campaign at the San Siro and scored two goals, including in the Europa League final defeat to Sevilla.
Despite also helping Inter to a second place finish in Serie A, Godin has been allowed to join Cagliari on a free transfer.
"Cagliari Calcio are pleased to announce the signing of Diego Godin: the great defender from Uruguay joins Cagliari on a permanent deal until June 30th, 2023," a statement from the Sardinia based club read.
"Strong leadership qualities, overwhelming charisma: with Godin Cagliari acquires a player of absolute international level, one of the strongest central defenders, outstanding in the air, best known for his ability to tackle and anticipate opposition movements, and for marshalling the defence.
"Sardinia is in his destiny: “el Faraòn”, which continues the long tradition of Uruguayan players of Rossoblù, is married to Sofia, born in Cagliari and daughter of the beloved former midfielder Pepe Herrera.
"Welcome to the family, Diego!"
Cagliari finished last season in 14th place and started the new season with a 1-1 draw away at Sassuolo last weekend.
Godin could make his debut against Lazio this weekend.