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The 34-year-old left Arsenal Ladies at the end of the 2016 season, bringing an end to her second spell at the club.
The former England captain, who had previously played for the Gunners between 1999 and 2002, has also had spells at Charlton and Chelsea Ladies.
"Casey is an experienced international defender with over 120 caps for England," manager Scott Rogers said.
"Her reading of the game and ability on the ball is fantastic so I have no doubt that she will prove to be a great signing for us."
Stoney added: "This is a great move for me joining a fantastic club and I am really excited for the new season."
The WSL is moving to a winter schedule from September 2017, but first the clubs will play a shortened Spring Series from February to June 2017, alongside the Women's FA Cup.
England defender Casey Stoney has signed for Women's Super League One club Liverpool Ladies.