The 21-year-old Irishman joins the Glovers on an initial one-month deal from the Premier League outfit and could go straight into the starting line-up at Bolton with Liam Fontaine injured and Byron Webster suspended.
Duffy, who has represented Northern Ireland at Under-21 level, has previously spent loan spells with Burnley and Scunthorpe.
Gary Johnson told the club's official website: "When we knew Shane was available for loan we immediately enquired about bringing him to Huish Park.
"With one of our centre-backs injured and another suspended we didn't want to turn down the opportunity of signing Shane.
"This signing suits all parties and as always we are very grateful to Everton Football Club."