He signs for an initial £50,000, which can rise to £100,000 based on appearances, and the forward is expected to make his debut at Nottingham Forest on Saturday.
He told the Scunthorpe Telegraph: "It's disappointing for me to leave Sheffield, but I have got to get on with it now.
"I scored goals in League Two last season with Rushden and am confident if I get the chances I can put them away again in League One for Scunthorpe."