Maddison (27) recently threatened to quit professional football after a frustrating spell at promoted League Two side Bolton Wanderers last season.
But he’s been tempted back into action - four divisions lower than League Two - by former Posh teammate Gaby Zakuani who now manages the big-spending Tulips.
Spalding will play in the Northern Premier League Central Division in 2021-22.
Maddison, who made 249 appearances for Posh, scoring 62 goals, said: “When Gaby reached out and offered me the opportunity to get involved with what he’s trying to build at Spalding, I felt like it was something I wanted to be part of. I look forward to getting fit and showing the gaffer what I can do”
Zakuani added: “I’m very pleased to get a player of this quality. I know Marcus personally, and I think at this arrangement suits both parties.”
Posh signed Maddison from National League Gateshead in 2014. He moved on loan to Hull in January, 2020 before joining Charlton on a free transfer in August 2020. He moved to Bolton on loan last January, but started just four games before leaving the club saying he was broken mentally and the ‘abuse, pressure and monotony’ had got to him.