Facey first joined City in 2007 and progressed through their academy system although he did not make a first-team appearance for the Premier League side.
The 22-year-old, who has been capped at various England age group levels and had loan spells at City’s sister club New York City as well as Rotherham and Heerenveen, can play at right-back or in central defence.
Northampton manager Jimmy Floyd Hasselbaink told the club’s official website: “Shay is a very exciting talent.
“He has a lot of pace and is aggressive, they are very welcome attributes, and he will give us flexibility in terms of the systems we can play and the options open to us.
“He is comfortable on the ball, he has an excellent pedigree, he has gained experience of first team football in three different countries and he is ready to settle down and to establish himself.”
Captain Graeme Shinnie scored the only goal of the game as Aberdeen laboured to end a run of four league games without a win, beating Dundee 1-0.
Boss Danny Cowley felt Lee Frecklington's moment of brilliance helped decide the Lincolnshire derby in Lincoln's favour as they beat Grimsby 3-1.
Millwall manager Neil Harris was delighted with his side as they comfortably won 2-0 at Barnsley.
A three-goal burst inside eight first-half minutes ensured Lincoln secured derby bragging rights with a 3-1 victory over struggling Grimsby.
Millwall's unbeaten run of games stretched to eight in the Sky Bet Championship as they comfortably defeated Barnsley 2-0 at Oakwell.