Gloucester's head coach Dean Ryan said: "Chris has been an outstanding professional both on and off the field since joining us after the World Cup and we wish him every success with this move.
"Though his starting opportunities have been limited, his dedication and versatility have been very influential within the squad. We still have some big games remaining this season and I'm sure Chris will have an important role to play in these."
Edinburgh head coach Andy Robinson added: "We want to compete at the highest level and to achieve that objective we have to have a world-class goal kicker. Unquestionably Mossy (as Chris is known) is a world-class goal-kicker.
"I felt that to move the squad forward that it was important to have a player of his ability in our ranks. We're signing him to compete for a place in two positions - full-back and stand-off.
"Having spoken with him I've been struck by his real desire to play for Edinburgh and with a player of his status available it increases our options to rotate our squad."
Paterson added: "I feel as if my one year at Gloucester has made me a more knowledgeable player. I have learned so much and have been fortunate to work again with good coaches.
"The environment at Gloucester has been terrific for me and that I have learned a lot and I think when I've been on the field I've performed pretty well."