The move gives the 31-year-old national team veteran a chance to revive his career following his retirement from the Swedish national team in June and his release in August from West Ham of the English Premier League.
Appearing at a press conference in Seattle on Tuesday, Ljungberg was all smiles as he discussed his enthusiasm for Seattle.
“I'm really happy to be here, I feel so welcome,” he said.
“I want to come here to play football. I want to help make the league better.”
After nine impressive years with Arsenal in England, Ljungberg moved to West Ham last year for a season in which he was plagued by injuries and ultimately decided to opt out of his four-year contract.
Coming to Seattle makes Ljungberg one of a handful of top-flight European players drawn to the MLS as “designated players”, freeing him from salary cap restrictions which inhibit the contract size of most of the league's players.
While the exact details of Ljunberg's salary were not disclosed, several media reports estimate he'll earn around $2.5 million a season as part of a multi-year contract.
The Seattle Sounders FC will start play in the 2009 MLS season, moving up to the top league as an expansion team following several years in the United States' second-tier professional league, the USL.
In addition to Ljungberg, the fledgling Sounders have signed veteran US goalkeeper Casey Keller, Gambian midfielder Sanna Nyassi, and French forward Sebastien Le Toux.
At the press conference, Ljungberg explained that he doesn't see the MLS as a second-rate professional league.
He referred to the experience of England's David Beckham, who signed with the Los Angeles Galaxy last year as the league's highest profile player and is set to return to AC Milan on loan for the remainder of the Serie A season.
"Of course there will be mixed reactions, and I know how it was when David went to the MLS," Ljungberg said.
"The Europeans see it as the league is not that great. If (Beckham) can crack it in Milan, it shows the MLS is at a good level. I want to make this league better and develop it. During this little break I've had, I've been training quite hard to keep fit, and it all feels good to be honest."
Joe Roth, the team's majority owner, made it clear the franchise has big plans for Ljungberg as the team marches toward its inaugural season in the MLS.
"Soccer is the sport of the world. In America, it's only a niche sport. The goal in Seattle is to prove that somewhere in America it can be more than a niche sport," Roth said.
"Every move we make, every player we go after, every ticket we sell, every sponsor we talk to, is toward that aim."