Galtier won the Ligue 1 title with PSG but lasted just one season at the club after a poor second half of the campaign.
The final weeks of his reign were marred by accusations of racism during his previous job at Nice. He has vehemently denied the accusations but will stand trial in December.
At Al-Duhail he will inherit a squad including former Liverpool and Barcelona playmaker Philippe Coutinho (31).
Galtier succeeds Hernan Crespo after the club parted ways with the ex-Argentina international who won the league with Al-Duhail last season.
The Frenchman will face an Al Nassr side spearheaded by Cristiano Ronaldo (38) and Sadio Mane (31) in the Asian Champions League group stage later this month.
Al-Duhail have just one point from two matches in the competition.
