The seamer returns after a four-year absence as Northants attempt to bolster their squad following the failure to register compatriots Andrew Hall and Johann van der Wath.
Louw, who turns 29 next month, left Wantage Road in 2005 after two successful seasons as a Kolpak player.
He joined Middlesex in 2006, but his decision to resume playing South African domestic cricket means he is now classed as an overseas player.
Northants' player of the year in 2004, Louw will arrive at the end of April to supplement a squad that also contains Nicky Boje, the former South Africa left-arm spinner who now qualifies under the Kolpak ruling.
"I have enjoyed my best cricket years at Northants and I am looking forward to playing there again," said Louw, who has taken 41 first-class wickets at an average of 18 for Nashua Dolphins this winter.
"Hopefully we can achieve what the club has being working towards and personally it will be great to be under the watchful eye of David Capel."