The 24-year-old, who captained Swindon to the npower League Two title last season, has arrived in time to be eligible for tomorrow's npower Championship fixture at home to Peterborough United.
As part of the deal, striker Rooney, who scored seven times in 30 appearances for Blues, heads to the County Ground on loan until the end of the season with a permanent move in place after that.
Irvine-born Caddis is a former Scotland Under-21 international who began his career at Celtic before moving to Swindon in August 2010. The assured defender earned rave reviews for his performances for the Robins and is now ready to test himself in English football's second-tier.
On completing his deal, Caddis told bcfc.com: "I'm looking forward to getting started. Birmingham City is a big club and something that I thrive off is playing for big clubs. I just hope now that I can settle in quickly. I've played in a lot of high-intensity games so I don't see why I can't come to the npower Championship and do what I do best."
Caddis has been given first-team squad number 28. A full exclusive BluesTV interview with the new recruit will follow shortly on bcfc.com.