His contract at Holker Street was set to expire in May.
"I hope everyone feels the same way as we do - that it's an excellent signing," Hatters boss Richard Money told BBC Three Counties Radio.
Walker has already scored 11 times in 18 appearances for Barrow this season, taking his tally for the Bluebirds to 64 in 176 games in all competitions.
We have got money and Crawley I am sure will be frustrated that we are getting stronger and stronger. I'm so excited
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"We now have three frontline strikers, we've waited for weeks to secure this signing," added Money.
"He's the one we've wanted ever since Tom Craddock went to Oxford.
"We identified him in the summer, we've finally been able to get him and we think he's going to be a real asset to us going forward."
The forward joined Barrow in the summer of 2007 after spending six months at Morecambe, where he only made one league start.
Cumbria-born Walker started out as a trainee at Scottish side Dundee but never made a first-team appearance.
In 2004 he signed for Greenock Morton, where he made 22 Scottish Division Two starts, scoring 12 goals.
Source: BBC Sport
Source: BBC Sport