The Saudi Pro League defending champions reached a deal with the former River Plate manager after they fired Portuguese coach Nuno Espírito Santo last week -- just six months after he led them to a title win.
Al Ittihad currently sit fifth in the Saudi league table with a 7-3-3 record, 11 points behind league-leading Al Hilal.
Gallardo, 47, last coached one year ago when he led River to a 4-0 win over Real Betis in a friendly held in Mendoza. His overall career record for 425 matches is 228-111-86.
He is the most successful manager in River's history. He won 14 trophies in his eight years at the helm since 2014, including three Copa Libertadores triumphs, before leaving in October of 2022 to take a break from coaching.
As a player, he also won six league titles and one Copa Libertadores title with River.
Al Ittihad will face Auckland City on Dec. 12 in the Club World Cup.