The highly-rated defender agreed a return to Sixfields after finding himself frozen out of the first-team picture at parent club Wolves.
Stuart Gray was keen to get Little back in his squad after selling Gabor Gyepes to Cardiff City in the week, and has now completed a deal for the 20-year-old.
The signing is an impressive one for the Cobblers, and represents a huge boost for Gray ahead of today's game against Millwall, which the defender is expected to start.
Little, who many rate as one of the finest players ever to represent Northampton, will be with Town for a month initially – he will be available for selection up to and including the game at Huddersfield on September 20 – but the Chron understands Wolves manager Mick McCarthy is keen to extend the deal for three months.
The signing also means the majority of the £200,000 fee paid for Gyepes could now be made available for Gray to spend, with Little simply taking the Hungarian's place on the wage bill and the playing budget not being affected.
Meanwhile, midfielder Luke Guttridge warned his Cobblers team-
mates they have to be wary of the threat of a Millwall side he rates very highly.
The Lions come to Sixfields in Coca-Cola League One today still smarting from their 1-0 defeat to Town in the Carling Cup last week.
And although Guttridge expects the Cobblers to follow up that success with another win this afternoon, he is expecting a difficult encounter.
"I was quite impressed with Millwall, I thought they were decent," said Guttridge.
"I like teams, like the MK Dons on Saturday and even Cheltenham, that play football in the right way. Millwall spread the pitch, they popped the ball round, they had runners and pace and it is nice to play against.
"You don't want to play against teams that are just pumping it up front to two massive strikers."
And he added: "It is a good opportunity for us to get a win. We know what Millwall are like and we know how to beat them, but they also did well against us in the second half so we know what they have to offer as well.
"That puts us in good stead, and hopefully we can bounce back from Saturday and get the three points."