As part of the deal, the terms of which were not disclosed, Raul, 37, will also become a technical adviser for the club's youth academy, which he will take over on a full time basis when he retires from playing, Cosmos said on their website.
"Everyone throughout the soccer world knows the Cosmos name and the legacy of the players that played for this team previously," Raul said.
"They helped establish soccer in America and I’m honoured to follow in their footsteps," added the former Real and Spain captain, who will join up with former international team mate Marcos Senna in New York.
"I believe in this club's vision and I’m excited to be a part of that."
Raul becomes the latest big-name import to sign up for the Cosmos, following the likes of Pele and Franz Beckenbauer, who played for the original team in the 1970s.
The club took soccer in the U.S. from a kids' pastime to glitzy big time news, filling the old Giants Stadium for games against teams like the Tampa Bay Rowdies.
But when the debt-ridden NASL folded in the 1980s, the dream of the Cosmos becoming an established force in the global game died with it.
The NASL was re-established in late 2009, and Cosmos was reborn along with it, and functions as the second tier of U.S. club soccer below Major League Soccer (MLS).
After a spell in Atletico Madrid's academy, Raul joined crosstown rivals Real in the 1992-93 season and made his debut for "Los Blancos" in October 1994 in a La Liga game at Real Zaragoza.
He won a host of titles with Real, including three Champions League crowns and six La Liga titles, and is the all-time top scorer in Europe's elite club competition with 71 goals, one ahead of current Real forward Cristiano Ronaldo.
He left Real in 2010 as the team’s all-time leading scorer with 323 goals in 741 appearances in all competitions and joined Schalke 04, helping the Bundesliga side reach the Champions League semi-finals in 2011.
He moved on to Al-Sadd Sports Club of Qatar in 2012 and Cosmos head coach Giovanni Savarese said the club were "thrilled" to have secured his services.
IMMENSE PASSION
"Raul’s skill and ability is world renowned," Savarese said.
"He’s a world-class player and he adds a whole new dimension to our attack.
"He also brings immense passion and knowledge that he can share with our team and with the next generation of Cosmos players in our youth academy.
"He’ll help set the academy training curriculum, structure and establish our player development pyramid."
Raul made his Spain debut in 1996 and during a 10-year international career scored 44 goals in 102 appearances, second only to New York City FC forward David Villa, who scored 59 in 97 games.
"Raul’s long list of accolades speaks for itself," Cosmos chief operating officer Erik Stover said.
"He’s recognised worldwide as one of the greatest players of his generation and we are thrilled to welcome him to New York."
(Writing by Iain Rogers in Madrid, editing by Julien Pretot and Pritha Sarkar)
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