The 32 year old Canadian international joins the English League 1 club until season's end. Dunfield played three seasons in MLS, but a knee injury ruined his 2013 campaign.
On Thursday, the Vancouver native agreed terms with English third-tier outfit Oldham Athletic.
The 32 year old joins Oldham for the rest of the 2013/14 season after impressing Latics boss Lee Johnson during a trial.
"With the immediate loss of Anton Rodgers to injury, I didn't feel we could take any chances,” Johnson told Oldham's club website. “Terry has good pedigree and has impressed us while on trial."
Dunfield played 52 games in Major League Soccer since 2011, scoring four goals and helping TFC lift the Voyageurs Cup in 2012. That season he was also named as Toronto's Most Valuable Player.
The 14 times capped Canadian international hardly figured in 2013, playing just three times due a knee injury.