The Jeddah-based club did not disclose any details regarding the contract of the South African tactician.
Mosimane, 58, was a free agent since his departure from his post with the Cairo giants early in June, which was done by mutual consent with the Reds management.
The South African coach departed Ahly after 20 months, during which he collected six titles including two consecutive African Champions League crowns.
He was close to delivering a record third straight title but Ahly fell at the last hurdle, losing 2-0 to Morocco's Wydad in a final played in Casablanca.
Despite his success, Mosimane came in for some fierce criticism from local media, who believed the team had not made sufficient progress under his guidance, pointing to last season's Egyptian Premier League loss to arch-rivals Zamalek.
The former Mamelodi Sundowns coach will be facing a huge challenge to bring his new club back to the top flight. Ahli were relegated from the top flight league to the first division after ending last season in 15th place, second from bottom of the table.
Mosimane will be succeeding Uruguayan coach Robert Siboldi who was shown the door by Ahli management after a shaky start to the season, collecting just one point from the first two games.
The Saudi team currently lie seventh in the first division league with eight points from five games including two wins, two draws and one loss.
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