The 25-year-old joins West Coast forward Quinten Lynch and Hawthorn winger Clinton Young as Magpies recruits in recent weeks.
The trade was completed on Thursday afternoon, less than 24 hours before the Gillette AFL Trade Period's Friday deadline of 2pm.
He was exchanged for NAB AFL Draft selection No.71, which the Pies acquired earlier on Thursday for utility Tom Young, who was traded to the Western Bulldogs.
Russell came second in the Carlton's best and fairest in 2010 after being taken with the No.9 selection overall in the 2004 NAB AFL Draft.
Trade tracker
Collingwood national recruiting manager Derek Hine described Russell as a potentially elite player looking for a new start.
"The facts are Jordan is only 25 years of age, a top 10 draft pick in his year and a player with attributes you would expect of a high order selection," Hine said.
"He finished top six in Carlton’s best and fairest twice and being a versatile type of player he can give us real flexibility through the half-back/wing areas. He is keen to re-establish himself and he was very keen to come to Collingwood.
"We think we can help Jordan recapture his best and if that happens he will be a very good footballer for us."
After 116 games as a Blue, Russell told the club at the end of the season he would seek a new home after being denied senior opportunities in his eighth year at the club.
He managed just seven AFL games this year after falling out of favour, and was a talking point throughout the free agency period but failed to find a suitor.
His fortune changed after he completed a fitness test at the Magpies last week and impressed club officials enough to give him a second chance.
"On behalf of everyone at the Carlton, we thank Jordan for his service over the past eight years and wish him all the best at his new football club," said Carlton general manager of football Andrew McKay.
Jennifer Witham is a reporter for AFL Media. Follow her on Twitter @AFL_JenWitham.
