According to media reports, the deal is estimated to be worth more than 100 million euros ($106.89 million).
"I am excited to experience a new football league in a different country. I have been fortunate to achieve amazing things in my career and achieve everything I can in Spain and Europe," Benzema said.
"It now feels the time is right for a new challenge and project... 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."
Al-Ittihad last month clinched the Saudi Pro League title for the first time since 2009.
Benzema follows his former Real team-mate Cristiano Ronaldo to the Gulf country after the Portugal forward signed a 2-1/2 year contract estimated by media to be worth more than 200 million euros with Al-Nassr in December.
Having joined Real in 2009 from Olympique Lyonnais, Benzema became the spearhead of the club's attack after Ronaldo left for Juventus in 2018, winning the Champions League five times and the LaLiga title four times.
He had his best season with Real in the 2021/22 campaign when he scored 44 goals in all competitions to lead the club to a record-extending 14th European title as well as the LaLiga crown.
Early in 2021, he earned a recall from France manager Didier Deschamps to the national team for the first time in six years, after falling out of favour due to his alleged involvement in the Mathieu Valbuena sex tape scandal.
He won the Ballon d'Or award for the best men's player in the world last year and he looked set to stay at the Spanish club for one more year, after a 2022/23 season in which he struggled with injuries and missed out on France's World Cup squad in Qatar.
However, an offer estimated by media to be worth more than 100 million euros from Saudi Arabia made him rethink his decision to stay in Spain for a final season, with the striker deciding to void the one-year extension clause he had in his contract.
Al-Ittihad last month clinched the Saudi Pro League title for the first time since 2009.
HUGE STEP FOR SAUDI FOOTBALL
Last week, Portuguese forward Ronaldo said he hoped that other big-name players would follow him to the league.
"Benzema's arrival is the most impactful transfer in the club's history to date," Al Ittihad said in a statement.
"It also marks another huge step in the Saudi Pro League’s journey to become one of football's leading destinations for the world’s very best after its biggest season to date."
Several high-profile players have been linked with moves to Saudi Arabia in recent weeks, with a source close to Argentina captain Lionel Messi - Ronaldo's rival for the title of best player of his generation - last month telling Reuters that he had received a formal offer to join Al-Hilal next season.
Al Ittihad's club president Anmar Alhailae hailed the signing of Benzema as a major achievement for the club, saying, "Karim is a 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."
