Spillane scored four goals in 49 for the Hatters while on loan from Norwich City in 2008-09 as he helped them to win the Johnstone’s Paint Trophy.
The 24-year-old centre-half was released by Southend last season and had recently trialed with Northampton Town and Burton Albion.
He said: “I’m delighted to be here and I cant wait to get going.
“The plans the club has and the way Jez (George) and Richard (Money) sold the club to me has got me really excited.
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“I can’t wait to get going and push on for a successful season here.
“I had other offers on the table, for more money, but I really believe in the project that Jez and Richard spoke about and wanted to be part of it.
“The fact that it’s a new challenge appeals to me so it all meant there was only one choice - that was Cambridge United.”
Table-topped Cambridge visit Kenilworth Road this afternoon (Monday).