The veteran midfielder will have an option to extend his stay until June 2025.
Iniesta, who spent the last five seasons playing in Japan for Vissel Kobe, joins Emirates Club as a free agent.
He is eager to have more playing time having clocked just 94 minutes across 18 appearances for Kobe last season.
"There was difficulty in not being picked to play after putting my heart into training," Iniesta said last month after playing his last game for Vissel Kobe. "I've experienced a lot of things over these five years, which is a long time."
Iniesta began his career at Barcelona and won nine league titles and four Champions League among other trophies in his 16 seasons at the club.