The 20-year-old was born in Victoria and expressed a desire to return home at the end of the 2012 season.
Gold Coast were willing to play hard ball, asking for two first-round picks for Caddy, but the Cats brokered a deal with them on Wednesday afternoon.
Geelong will give Gold Coast their compensation pick ironically received for losing Gary Ablett to the Suns while the clubs will also exchange a number of other draft selections that are yet to be finalised.
But while the finer details of the trade have not been confirmed and the paper work has not been submitted to the AFL, both clubs have confirmed that Caddy will play at Geelong in 2013.
"We are really pleased we will secure a first round compensation pick, tied to Geelong's finishing position, to be used in either the 2013 or 2014 drafts as well as draft selections to be finalised in exchange for relocating Josh Caddy back to Victoria," Gold Coast general manager of football operations Marcus Ashcroft told the club's official website.
"Continuing to spread the age of our playing group with elite talent ensures we will have a very balanced playing group in the years to come which is important as we strive for sustained success."
Gold Coast now have three first-round compensation draft picks that can be used up until the end of the 2015 season.
The Suns might be flush with picks but Cats fans will be delighted after securing the services of the highly-rated midfielder.
Caddy who was drafted from the Northern Knights and played for Vic Metro at the under-18 national championships - has played 24 matches for Gold Coast in his two seasons at the club, averaging 15 disposals per game.He played just twice in 2011 but featured in every match in the 2012 season, winning a rising star nomination in Round 16.