The Ligue 1 outfit will also have the option to buy the defender at the end of the 2014-15 campaign, with Cardiff ready to offload the player after just one season in the Welsh capital.
Theophile-Catherine, who arrived on a four-year deal from Rennes for a reported £2.1million last September, made 28 Premier League appearances for Cardiff before their eventual relegation to the Championship.
"I am very happy to arrive at the ASSE," he told the club's official website. "ASSE is a great club, a legendary club.
"Many people in my family are fans of Saint-Etienne, I'll have the pressure at home
"I cannot wait to experience the atmosphere of Geoffroy-Guichard.
"When the opportunity to return to France - especially at Saint-Etienne - presented itself, I did not hesitate."
