Draxler has signed a contract until the summer of 2025.
The 29-year-old joined PSG from Wolfsburg in January 2017 and went on to make 198 appearances for the Parisians, scoring 26 goals and chipping in with 41 assists.
Draxler won four Ligue 1 titles with PSG and also added four Coupe de France trophies and three Coupe de la Ligues.
Draxler spent last season on loan at Portuguese giants Benfica, where he won the Primeira Liga.
“Al-Ahli Sports Club officially announced on Monday its contract with German star Julian Draxler for two seasons ending in the summer of 2025,” said a statement on Al-Ahly’s website.
PSG said in their statement: “The club would like to wish Julian all the best for the rest of his career.”
A member of Germany's 2014 FIFA World Cup winning squad, Draxler has won 58 caps for the Die Mannschaft, scoring seven goals.
Draxler former PSG teammates Marco Verratti and Abdou Diallo have all moved to Qatar this summer, signing for Al Arabi.