The 31-year-old will provide cover in the back-row for the Premiership basement boys following the retirement of Hendrie Fourie.
Braid won six caps for the All Blacks between 2002 and 2010 and faced the Lions twice in 2005.
The dynamic open-side flanker was part of the New Zealand Maori side that inflicted a famous 19-13 defeat on the Lions but he also tasted defeat in an Auckland shirt as the dirt-trackers completed their unbeaten run.
Sale director of rugby Steve Diamond was delighted to secure the services of Braid and hopes he can help the Sharks turn the tide.
"Dan joins us at a critical stage of our season," said Diamond.
"He is a hard working flanker who tackles well and reads the game well too. He arrived in the UK on New Years Day and came to Carrington this morning to meet his new teammates.
"He is an important signing for us and I am sure he will fit in perfectly."
Braid sought the advice of two other former All Blacks who have faced the Lions before making the decision.
Luke McAlister spent several years with Sale and Sam Tuitupou is currently with the north east club.
"It's great to get the opportunity to come to Europe and play a different style of rugby and live a different lifestyle," added Braid.
"I know Sam Tuitupou quite well. We played school age rugby together back in New Zealand and with Auckland and the Blues, so he's given me a few tips.
"And I also spoke to Luke McAlister who used to play for Sale Sharks and he was really complimentary about the club.
"When I knew I was coming here I went on-line and had a look at the squad and some of the names here such as Sam and Danny Cipriani - and to see where Sale are in the table was a bit of a shock.
"But there are still quite a few games to go and with the win against Worcester, hopefully it's a case of onwards and upwards."