Dauda, 27, a Nigerian with Swedish citizenship, arrives on loan from Dutch side Vitesse Arnhem until the end of the season.
He has previously won league titles with Red Star Belgrade in Serbia and Kalmar in Sweden.
"He's got pace, power, I'm sure he'll score goals," said Robbie Neilson.
The Hearts coach added:. "The fans will see a top quality player who's played at the top level in three European countries.
"He was our number one target at the start of the month but we thought the deal wasn't going to happen, but it was back on again and I'm delighted to get him."
Dauda declared himself "really happy" after concluding negotiations.
"I spoke with Robbie on the phone and he told me he has followed me for quite a while now, and as a player it is a dream to hear a coach say that," he told the Hearts website.
"Now I have to go on the pitch and show him he made the right decision. I'm really looking forward to meeting my team-mates and learning the team's style of play."
The Sow deal is yet to be completed, with the winter transfer window running longer in China.
The 25-year-old Swede moved to Tynecastle on a two-year deal in the summer of 2014 following a 12-month stint at Crystal Palace.
He has scored 11 goals in 27 games this season for the Premiership side, after netting 12 goals in his first term at Hearts as they ran away with the Championship title.
The Edinburgh club have also signed former Watford, Cardiff and Wigan midfielder Don Cowie and sent Morgaro Gomis on loan to Motherwell.
Hearts have signed striker Abiola Dauda on loan after agreeing to sell top-scorer Osman Sow for a fee in excess of £1m to an as yet un-named Chinese club.