Williams joins on a free transfer on a two-year deal after his contract with Reading expired.
The USA international played against Huddersfield in the play-off final and was considered to have been Reading's best performer on the day, something which was not lost on Terriers boss David Wagner.
As the 28-year-old was unveiled, Wagner commented: "As our fans will have seen during the Play-Off Final, Danny brings a lot of quality to any team he plays for. His way of playing: his aggressiveness, tenacity and athleticism fits our ‘Terriers Identity’ perfectly."
“It is not usual that a player of Danny’s ability is available on a free transfer, so there was understandably a lot of interest from clubs."
“When we spoke, it was clear that he wants to prove himself at the highest level in England and that he had a real desire to come and play for Huddersfield Town. He is a terrific character and will totally fit in with our group."
“Together with our existing players and the arrival of Aaron Mooy, Danny offers us really good competition for places in central midfield"
CONFIRMED: an #IndependenceDay special for #htafc as US international Danny Williams signs a two-year deal! https://t.co/XcunJifFsG (DTS) pic.twitter.com/FHc8kONJEN
— Huddersfield Town (@htafcdotcom) 4 de julho de 2017
20-year-old Palmer meanwhile re-joins Huddersfield on another season-long loan from Chelsea.
The player was a fans' favourite with Town last season and has now returned for a second spell.
Wagner was once again very happy with the deal, saying: "I’m very happy to have Kasey back at the Club. As we know from last season, he’s a very talented English player with high potential."
“Just as importantly, he is a fantastic personality too. He has real desire and hunger to be as good as he can be, but he’s also very humble. This is the best and most exciting mix that a player can have as he strives to become an excellent Premier League player."
“I know he feels he has unfinished business after his injury last season and I think that determination will be a big plus for him and the team this season.
HE'S BACK! Promotion winner @kaseypalmer45 has returned to #htafc on a season-long loan from @ChelseaFC #KP45 (DTS) pic.twitter.com/LrreemHdFD
— Huddersfield Town (@htafcdotcom) 4 de julho de 2017