The 36-year-old defender, who has won an Italian record of 132 caps but has been short of form this term, will move from Juventus after the June 11-July 11 World Cup in South Africa.
Chairman Abdullah Al Naboodah told the club's website: "We have signed a contract with 2006 World Cup winner Fabio Cannavaro for two years.
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"This deal with a player like Cannavaro is one of the most important deals for us because he's a player with great experience and talent. He is also one of the best defenders in the world."
Cannavaro's previous clubs include Napoli, Parma, Inter Milan and Real Madrid.
"I was already thinking of moving to Dubai," Cannavaro added in the statement.
Although his experience will be valued by his new club, as a player in Serie A this season he has been a shadow of the centre-back who was the bedrock of Italy's 2006 World Cup triumph.
Cannavaro returned to Juve for a second spell last year but he struggled consistently as age caught up with him and the Turin club, who finished a dismal seventh in Serie A, never showed any signs of offering him a new deal.
He had wanted to finish his career with brother Paolo at hometown team Napoli but club president Aurelio De Laurentiis said he was too old.
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