After putting pen to paper at City's Apperley Bridge training ground, Graham, 18, will stay with the Bantams until 8 February 2014.
The Coventry-born winger should now, subject to receiving the relevant clearances, go straight into City's squad for Saturday's Bristol City match after training with Phil Parkinson's squad for the first time this Friday.
Graham, who can play on either flank, will wear squad number 19 during his time at the Coral Windows Stadium.
The young attacker comes to Valley Parade having already enjoyed a loan spell at Championship side Ipswich Town earlier this season.
Graham has also been capped at Under 16 and Under 17 level with England.
News of Graham's arrival at the club comes shortly after confirmation of Sheffield Wednesday 'keeper Arron Jameson's loan deal with City.