Nugent joined the Clarets on a loan deal on transfer deadline day from Portsmouth.
“We are delighted to have got a player of David’s stature,” he told the club’s official website.
“Portsmouth paid £6million for him and I think we would recognise that it has been a bit stop-start for him and he wants to get his career up and running again.
“We have not had an abundance of strikers, so we have always been in the market and been looking to bolster that department.
“We have got someone with a fantastic pedigree and I am sure he will be a tremendous acquisition for the squad.
“He also had two other options from Premier League clubs and came to Burnley, so we are delighted about that.”