The 23-year-old flew to the Middle East country on Tuesday and was unveiled to the team's fans on Wednesday.
It brings to an end the midfielder's loan deal with struggling Premier League side Pompey.
He had joined Portsmouth on a year's loan from Spartak Moscow in January, but financial problems meant they could no longer afford his services.
Al Saad reportedly paid the Russian club over $5m to secure the Ghanaian's services.
Owusu-Abeyie, who has previously played for Arsenal, has had loan spells with Birmingham, Cardiff, and Spanish side Celta Vigo.
In an interview on his new club's website Owusu-Abeyie says he is happy to be at the club.
"I'm happy with the good reception from the administration and fans of Al Sadd," he said.
"I have a good feeling and this will give me a big push to have good performances with the team.
"I came to Qatar in order to give all what I have to Al Sadd and help them to win a lot of matches and titles as well.
Al Saad have been champions of Qatar on 11 occasions.
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