Powell had been without a club since last week when he was let go by Wasps following a bar-room brawl.
The 29-year-old No8 was involved in an altercation with a group of Queens Park Rangers football fans in a Shepherd's Bush pub in April and was initially suspended alongside fellow Lion Tim Payne before leaving Adam's Park by mutual consent.
Powell reportedly attracted interest from Irish giants Munster, as well as promotion-chasing Worcester, but has instead opted to sign for Steve Diamond's Sale.
The former Beziers, Leicester, Newport, Llanelli and Cardiff Blues star becomes Diamond's 14th new signing since taking over at Edgeley Park following the sacking of Mike Brewer.
"This is a huge signing for us," said Diamond.
"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."
Powell missed out on selection for Wales' summer Test with the Barbarians on June 4 and will now have just four games to stake a claim for a World Cup spot later this year.