The Saudi Arabian giants have hired the former Almeria assistant who they believe has a similar football philosophy to Barcelona coach Pep Guardiola
The former Almeria assistant, 43, arrived in Dubai on Sunday and has been formally contracted by the two-time Asian champions.
Al Ittihad, who had chased ex-Getafe and Villlarreal boss Victor Munoz after Matjaz Kek's sacking, hired Caneda as they look to bounce back from a poor 2011-12 season domestically where the team currently sits seventh.
Before boarding his flight to West Asia, Caneda told La Voz de Galicia that Al Ittihad hired him as he has a similar philosophy to Barcelona coach Pep Guardiola.
"Five days ago they contacted me and told me they were interested in a coach that would cater to a similar philosophy to Guardiola," he said. "They thought I could be the right person.
"Clearly I have my own ideas, but my ideas and Guardiola's converge in many respects."
Al Ittihad, who are eight-time Saudi champions, will compete in the 2012 AFC Champions League after reaching the semi-finals last year.