The 23-year-old has shown up well in a couple of practice matches with the Bulls, having decided against accepting a new deal with the Hatters for this season.
United manager Graham Turner told the Hereford Times: "He is a neat passer of the ball who can get forward.
"He's been with us for a couple of weeks and has played a couple of games.
"One was against Team Bath and one against Aston Villa reserves, so we're pleased to have him on board."
O'Leary scored three times in 55 appearances for Luton, while also netting three goals in 22 outings during a loan spell with Tranmere Rovers.