The Austria international arrives as a free agent and gives Udinese one of the most decorated players in European football, having won four Champions League titles during spells with Bayern Munich and Real Madrid.
Alaba spent 11 seasons at Bayern after joining the club as a teenager, making 431 appearances and winning 10 Bundesliga titles, six German Cups and two Champions Leagues. He moved to Real Madrid in 2021 and added two more European titles alongside two LaLiga championships.
The 34-year-old has also been a leading figure for Austria for more than a decade, collecting 117 international appearances and captaining his country.
Udinese general manager Franco Collavino believes the signing represents a statement of intent from the club.
"The signing of David Alaba is a source of enormous satisfaction for the whole club. We welcome an established champion, a leader and an exemplary professional."
Alaba has signed a contract running until June 30, 2027, and the club believes his experience can have an impact both on the pitch and within the dressing room.
The Austrian is also determined that his move to Italy should not be viewed simply as the final stage of his career.
"I've experienced many things and I've won a lot throughout my career, but one thing hasn't changed: I want to win again. I want to continue competing and I still want to achieve something special."
Alaba is expected to provide leadership to a relatively young squad, but he has stressed that he wants to contribute as a player rather than simply become a senior figure around the team.
"I'm not here just to be the veteran of the team, and I'm definitely not here to end my career."
He added: "I am still too ambitious for that and I still firmly believe that I have a lot to offer on the pitch."
The move gives Alaba the opportunity to experience Serie A after spending virtually his entire senior club career in Germany and Spain.
For Udinese, it is an opportunity to bring the knowledge of a player who has competed at the highest level of European football into a squad looking to take another step forward.