The clubs did not disclose the transfer fee for Demiral, who joined Atalanta from Juventus in 2022, but Italian media said it was 20 million euros ($21.73 million).
Demiral scored once in 28 games in all competitions for Atalanta last season.
"A new warrior in our squad" Al Ahli posted on messaging platform X, previously known as Twitter.
Demiral becomes the latest addition to Al-Ahli, who returned to the Pro league following a season in the second division, after Riyad Mahrez, Roberto Firmino, goalkeeper Edouard Mendy, Alain Saint-Maximin, Franck Kessie and Roger Ibanez.
Matthias Jaissle's team have enjoyed a great start to the season with two wins from two games.
The Saudi Public Investment Fund (PIF) has announced a Sports Clubs Investment and Privatisation Project involving league champions Al-Ittihad, Al Ahli, Al-Nassr and Al-Hilal.
PIF owns 75% of each of the four clubs, while their respective non-profit foundations own 25% of each.
