Sportsmail revealed Leicester's interest in Yakubu last week, and the 28-year-old Nigerian has made the move after being sold on their ambitious project under Sven Goran Eriksson with a possible £4million permanent deal to follow in the summer.
Big signing: Delighted Yakubu is paraded by Leicester manager Sven Goran Eriksson
Yakubu passed a medical on Wednesdayand will be eligible to play for the Foxes as soon as he receivesFootball League clearance.
'Yakubu is a tremendous signing for Leicester City. He will bring pace, power and experience to the club,' Erikkson said.
'He has captained his country, played in major competitions and is a first-class footballer, who I am certain will help us to achieve our aims of moving up the npower Championship.
'We are delighted that he is joining us until the end of the season and I'm sure that the supporters will enjoy watching him in action.'
Yakubu, who will hope to play at Preston this weekend, is Leicester's third signing of the January transfer window after Ben Mee and Sol Bamba.
The former Portsmouth and Middlesbrough forward will hope the move can rejuvenate a career which has stagnated since he suffered a serious achilles tendon injury in November 2008.
Yakubu scored 21 goals in his first season at Goodison Park after an £11.25million move from Boro four years ago but has found the net just once this term.
Everton manager David Moyes left him out at the start of the season as he felt he lacked match fitness after alate return from the World Cup and the distraction of an approach from West Ham.
Rhythm and Sol: Bamba (centre) scored on his debut for Leicester in the FA Cup tie against Manchester City
Yakubu said:'It means a lot to me to be joining Leicester City and to be given thischance.
'When I had the option to come here, I didn't think twice. The manager is one of the greats in football history and to work with him presents a special opportunity for me.'
Yakubu's departure could provide Everton with the flexibility to bring in a replacement on loan. Manager David Moyes has bemoaned his side's lack of goals from strikers all season but has no funds available to buy this month.
The Toffees have been linked with a loan move for Monaco's Dieumerci Mbokani, who has reportedly also attracted interest from Aston Villa and West Brom.
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