The 70-year-old had been out of management since he was sacked by Russia in 2015, but has now become the latest high-profile name to move to the burgeoning Chinese league.
"Today we have signed a working contract with Mr Fabio Capello. He will be the head coach of our team since today. Welcome Fabio!" read a statement from Jiangsu.
Capello spent four years in charge of England before resigning in February 2012, just months before the European Championships.