Cahill will join fellow Premier League players Thierry Henry and Teemu Tainio in New York, while former Barcelona defender Rafael Marquez also plies his trade at the Red Bull Arena.
"I am very happy to start a new chapter of my career with the New York Red Bulls," Cahill told the official website.
"As we have seen over the past few years, MLS has developed into a very competitive league with many talented players.
"I am impressed with what the Red Bulls are trying to accomplish in MLS and within American soccer and I am looking forward to this new challenge. I will do everything I can to help bring New York its first MLS Cup."