Powell's departure from the London club came after he was involved in a bar-room incident last month, which left him needing stitches to a head wound.
Powell has courted controversy in recent times after he was also involved in an incident with a golf buggy last year which landed him with a 15-month driving ban and an immediate exit from the Wales squad.
Despite that, Sharks' executive director of sport Steve Diamond welcomed the signing of the 29-year-old, who has been capped 17 by his country and toured South Africa with the British and Irish Lions two years ago.
"This is a huge signing for us," he said in a statement on Sale's website.
"Andy has tremendous experience, is one of the best ball-carrying forwards in world rugby and is one of the final pieces in the jigsaw as far as our recruitment goes for next term."
While Powell, who had also reportedly been courted by Worcester and Munster, has been quick to find a new club his inglorious departure from Wasps has cast his international future into doubt in a World Cup year.
Wales coach Warren Gatland, who is strong on discipline, has summoned him for showdown talks and his place in the autumn showpiece could be in jeopardy, especially with strong back-row competition.
He has not been included in Wales' squad to play the Barbarians on June 4 and, with the deadline for the naming of the 30-man squad on August 22, Powell will have just four games to cement his place for the tournament in New Zealand in September and October.
Powell was in the headlines for the wrong reasons in February last year after pleading guilty to driving a golf buggy while unfit through drink after the player was arrested at a motorway service station at junction 33 of the M4 hours after Wales' victory over Scotland in the Six Nations.
He was dropped from the Wales squad with immediate effect and at the subsequent trial was banned from driving for 15 months and fined £1,000.
He did, however, battle his way back into Wales contention during this season's autumn internationals. He started the Six Nations opener against England in February before being injured.
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