The 22-year-old scored twice in 12 games during a recent loan spell with Grimsby Town this season and now joins the Iron on a two-and-a-half-year deal.
Townsend, who spent time on loan with Scunthorpe last term, will not be able to play against Chelsea in the FA Cup on Sunday as he is Cup-tied.
He is the second defender to join the Iron this month after Huddersfield's Murray Wallace made his loan permanent.
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Scunthorpe have signed Hull City full-back Conor Townsend on a free transfer.