The 29-year-old was a regular for the German club last season and becomes Martin Jol's second signing ahead of the new campaign after completing a swoop for Mladen Petric
The 29-year-old made 33 appearances in the Bundesliga last season as Koln suffered relegation from the German top flight.
Martin Jol has already bolstered his squad ahead of the new season with the signing of striker Mladen Petric, while Riether primarily featured in central midfield for Koln but is also adept at playing as a right-back.
I feel very pleased to have signed," Riether told the club's official website.
"It feels like I've had a long break from football and for me this is a new experience in a new country.
"Fulham is a good club, a big club with a big tradition and for me it's great to be here. I played here one time with Wolfsburg and I remember Craven Cottage being a great stadium with great fans, and I hope I can go on to have a great season here.”