He is set to play for the Hove-based club as a European Union player in the upcoming season meaning he will not be classed as an overseas signing.
Saqlain has joined Sussex initially as cover for fellow Pakistan slow bowler Mushtaq Ahmed while the leg-spinner is with the team at the Cricket World Cup in the Caribbean.
In early April Saqlain is allowed to apply for his British passport and as such will be able to play for Sussex as an EU qualified player. That might see him becoming available for England in 2008.
After playing against India in 2004, he sustained a knee injury effectively ending his international career, one in which he took 208 Test wickets and 288 in one-dayers. He has also represented Surrey and Ireland.
"I am very much looking forward to at least the next two years with Sussex with great ambition and determination having spent the majority of the last three years out of the game," said Saqlain.
Sussex cricket manager Mark Robinson said: "The option of the two Mushtaqs bowling in tandem is a mouth-watering prospect.
"Saqlain is only 30 and we hope with the right care and attention from our support staff he will have a long and successful new chapter of his career."
And captain Chris Adams added: "The last time I felt this excited about bringing a player to the Club is when we signed Mushtaq Ahmed.
"If Saqlain can emulate even half of what Mushtaq has achieved then not only will we have allowed him to rediscover his form and presumably his happiness with his game ad his cricket, but I am certain that if that's the case the England selectors will be watching very closely.
"I would like to add that whilst I am sure there is much hard work ahead for Saqlain he will bring an enormous amount of experience to the squad.
"And with young spinners like Ollie Rayner and Tom Smith that can only help them advance their own games and quest for first-class cricket, watching and learning alongside a true master."
A pioneer of the 'doosra' delivery, the ball that turns away from the right-handed batsman as opposed to the stock off-break which spins towards him, Saqlain was an important member of the Surrey team that won three County Championship titles between 1999-2002.
His arrival at Hove sees Saqlain become the third Pakistan cricketer at the club with pace bowler Rana Naved the county's other overseas player along with Mushtaq Ahmed.