The 32-year-old Moroccan moves to Libya after spells with clubs in France, England, Spain, Belgium and Qatar, as Al Ittihad look to bolster their squad ahead of the new season.
Al Ittihad announced the signing in a video on their official Facebook page, hailing Boufal as a "magician" and welcoming him to Tripoli.
"From the shores of the Atlantic to the Bride of the Mediterranean, Morocco's star arrives in Tripoli to begin a new chapter," the club said.
Boufal, who previously played for Southampton, Celta Vigo and Lille, was part of the Morocco side that became the first African and Arab nation to reach a World Cup semi-final at the 2022 tournament in Qatar. He was not included in Morocco's squad for the 2026 World Cup.
The attacking midfielder has also had spells with Al Rayyan, Union Saint-Gilloise and Le Havre.
Al Ittihad will hope Boufal's experience and creativity can help strengthen their bid to win domestic honours.