The 34-year-old midfielder, who will leave Sheffield Wednesday when his short-term contract at Hillsborough expires at the end of February, has agreed a one-year deal with the Irish outfit.
Shamrock manager Trevor Croly has admitted that he is delighted to sign a player of McPhail's experience.
"Stephen is a very good addition to our squad for the up-coming season. He is a quality player who has significant experience playing at a very high level," Croly told the club's official website.
"He will fit in well to the squad we have built for the new season and blends in well with the mix of experience, talent and youth we have put together. He is proven to have a strong, committed character and is very keen to come and do well here well at Shamrock Rovers."
McPhail, who began his career at Leeds United, has also played for Barnsley and Cardiff City.