Still only 25, Caicedo has already represented seven clubs in a professional career featuring stints in Switzerland, England, Portugal, Russia and Qatar.
The powerful striker, who was a free agent after leaving Al Jazira, will now return to La Liga, having previously enjoyed spells at Malaga and Levante.
Caicedo's time with the latter was particularly productive as he scored 13 goals in 27 league appearances during the 2010-11 season.
A lucrative move to Russian Premier League outfit Lokomotiv Moscow followed, before the former Manchester City man moved on to Al Jazira in January.
However, the Qatari club's recent acquisition of Mirko Vucinic saw Caicedo deemed surplus to requirements.
Having scored seven times during Ecuador's FIFA World Cup qualifying campaign, Caicedo started two of his country's three group games at the finals in Brazil but was unable to find the net.
He is set to be presented by Espanyol, who finished 14th in La Liga last term, next week.
