The 25-year-old Ireland international joined up with his new team-mates on Monday and is set to make his debut in Sunday's home game against Hull KR.
McCarthy, who was a member of the Wolves' Challenge Cup final-winning team at Wembley last August, has made just four substitute appearances this season and has been playing on a dual registration for Swinton.
"It is a massive opportunity for me to get some Super League game time and to hopefully pick up a bit of form," said McCarthy, who has had a previous loan spell at Wakefield.
"We're going into a World Cup at the end of the season and I want to be playing at the highest level. I'm grateful to Cas for giving me this opportunity and I aim to repay them with performances."
Castleford caretaker coach Danny Orr said: "It is really good that we have had the chance to bring another quality player into the squad.
"It will be good for the team to have a new face around the place."