The French striker, 35, underwent a medical in Madrid in preparation for joining the Jeddah side, the kingdom's oldest sports club.
Benzema said on the club's official social media channel: “I am excited to experience a new football league in a different country. Al Ittihad Club has an amazing history, incredibly passionate fans and big ambitions in football to be a force in Asia after winning the league.
"I have been fortunate to achieve amazing things in my career and achieve everything I can in Spain and Europe. It now feels the time is right for a new challenge and project. Every time I’ve visited Saudi Arabia I’ve always felt such warmth and love from the fans and people.
"I am looking forward to joining my new teammates and, together with them, help take this amazing club and the game in Saudi Arabia to new levels.”
On Tuesday, the star said farewell to his Spanish club Real Madrid in a ceremony at their training ground attended by president Florentino Perez, manager Carlo Ancelotti and his teammates.
Benzema spent 14 years at Real and won 25 major trophies, including five Champions Leagues, four La Liga titles and three Copas del Rey.
He joined them in 2009 from Ligue 1 side Lyon and scored 354 goals in 648 appearances for them. Only Cristiano Ronaldo, with 450 goals, is ahead of him on the club's all-time scorers' list.
Ronaldo now plays in the Pro League for Al Ittihad's rivals Al Nassr and Benzema, who has 97 caps and 37 goals for France, said on the prospect of playing against his former Real teammate: "Cristiano Ronaldo is already there, a friend, which shows Saudi Arabia is starting to further progress its level.
"It’s a good league and there are many good players. I am here to win, like I did in Europe. I am excited to see you in Jeddah.”
Benzema, who is also the current Uefa Player of the Year, added: “It’s a new challenge for me, a new life and I can't wait to start training. I will do everything to win trophies, to score, to show my talent, to satisfy the fans, the club, the President – everyone."
He last played in Saudi Arabia at the start of the year, leading Real Madrid in the Spanish Super Cup final.
This season saw Al Ittihad, managed by Nuno Espirito Santo, secure a ninth overall title in the Saudi Pro League – their first championship since 2009. The team, considered one of Asia’s most successful clubs, have now qualified for this December’s 20th Fifa Club World Cup.
During the official signing on Monday morning in Madrid, Al Ittihad Club president Anmar Al Haili said: “To sign the current Ballon d’Or holder from Real Madrid is another historic milestone for this special club.
"Karim is global football icon, he’s box office and very much at the top of his powers. He joins a club and hugely competitive league – in a country with big ambitions both on and off the pitch.
"We know all eyes will be on him and can’t wait to see him in the No 9 shirt of Al Ittihad Club next season as we face an incredibly exciting challenge to defend our title, compete in Asia and play on the global stage of the Fifa Club World Cup.
“When you start winning championships, you attract fans and admirers, especially from the younger generations. Having a player like Karim Benzema, you'll see, will have a sporting affect and presence on the streets, they will start wearing Karim’s shirt, they will try to move like he does on the pitch.
"I assure you, these will be very beautiful and historic moments. Welcome Karim!”