The 30-year-old was unveiled in front of a packed crowd at the Sounders' CenturyLink Field after spending seven seasons in England with Fulham and Spurs.
"I am very excited about coming back to the MLS and thrilled to be joining Sounders FC," he told the club's official website.
"Having recently played in Seattle with the national team, I experienced the incredible atmosphere and the passion from the supporters first-hand.
"It's going to be an honour to represent the fans in Seattle."
Dempsey is the current captain of the United States national team and has earned 99 caps since making his debut in 2004.