The 28-year-old versatile Dutch international joins the Abu Dhabi club from Turkish side Kasimpasa and will have his medical on Wednesday.
He is expected to join up with the rest of the squad on July 10.
The former Ajax academy graduate is believed to have signed a two-year deal with the club and will take up Miroslav Stoch's place as part of the allowed foreign contingent, alongside Asamoah Gyan and Lee Myung-joo.
"I am very happy to move to Al Ain," Babel said.
"I want to regain the Asian Champions League and the President's Cup, and retain the Arabian Gulf League title. Observers of Asian football have a good knowledge of Al Ain: they are a team full of stars and armed with a history full of achievements and championships.
"I'm very excited to start the season with the team, especially since negotiations were conducted in an excellent manner with high professionalism between all parties. I really wanted to represent Al Ain and I hope to repay the confidence shown in me by the coaching staff, led by Zlatko Dalic, so that I can make the fans of the team happy."
A right-footed winger or striker, Babel made his name as a left-sided wide forward for Ajax Amsterdam before making his move to Liverpool in 2007.
After making 146 appearances for the Reds over three-and-a-half years, Babel switched to Hoffenheim before returning to Ajax for a season-long loan.
In 2013, he transferred to Kasimpasa, where he scored nine times in the 29 league matches last season.
"Babel was one of the most prominent names put forward by Zlatko Dalic to strengthen the team for the new season," Al Ain the team manager Nasser Al Junaibi said.
"He has a wonderful personality, high technical potential and has considerable experience in football with clubs such as Liverpool, Ajax and Hoffenheim."
Babel has represented the Dutch international side on 46 occasions.