Sheehan, 22, starred for Ireland in the recent International Rules series against Australia.
He becomes the third Irishman on the Blues' list, joining Zach Tuohy and fellow new recruit Ciaran Byrne.
Sheehan first trained with Carlton in 2009, alongside Tuohy, but he chose to return home to continue his career with County Cork.
Blues football manager Andrew McKay said the club had been happy to give Sheehan an opportunity once he declared an interest in coming back to Australia.
"When he first came over he was very skilful with both feet, very balanced and a very powerful runner, so he has all the attributes to play Australian rules football," McKay told carltonfc.com.au.
"Hopefully we can develop his skills next year and get a few games into him, with bigger and better things to come."
Tuohy has been a major success story for the Blues, playing 54 games since his debut in 2011, and finishing seventh in the club's best and fairest count this season.
Sheehan played as a full-forward at Cork although, at 188cm, he is not tall enough to hold down a key position in Australian football.
According to reports in the Irish media, he has signed a two-year contract with the Blues.
