The 32-year-old, a member of Australia's last two World Cup teams, joins Thierry Henry and Rafa Marquez as high-profile players on the roster of New York, which has never won an MLS title.
"I am very happy to start a new chapter of my career with the New York Red Bulls," Cahill said. "As we have seen over the past few years, MLS has developed into a very competitive league with many talented players. I am impressed with what the Red Bulls are trying to accomplish in MLS and within American soccer and I am looking forward to this new challenge."
Known for his ability to score on headers, Cahill scored nine goals for Everton in 2010-11 but didn't have any from Dec. 20, 2010, against Manchester City until last Jan. 21 against Blackburn. His only goals for the Toffees after that were against Sunderland in the FA Cup on March 13 and vs. Fulham on April 28.
He has 24 goals in 55 international appearances, including three in the World Cup, and 68 goals in 278 games with Everton, where he played alongside American goalkeeper Tim Howard and midfielder Landon Donovan.