The 23-year old has put pen-to-paper on a one-year deal and will be familiar with his new surroundings, having had a short loan spell at Kidderminster last season.
"Andy is a player I admire," Harriers boss Mark Yates told the club's official website.
"We managed to get him on-loan last season but unfortunately he pulled a stomach muscle early on - but even with his injury, his attitude around the place was great.
"That convinced me even more that he was the kind of player I want and he'll bring experience and ability to the squad."
Ferrell is a former Newcastle United Youth player and joined Watford on a free transfer in July, 2004 before signing for Hereford in August, 2005.
Source: http://www.confguide.com/newsArticle.do?id=6683