The club paid £1.8 million ($2.3m) to sign the former Liverpool attacker, who has a deal with the club running through the end of the season.
Babel made made 146 appearances for Liverpool during a three-and-a-half year stint with the club from 2007-11.
The Netherlands international will join Claudio Ranieri's side in the push to stay in the Premier League, as Fulham currently sit 19th in the Premier League.
“My first impressions are good and I’m very excited," Babel said in a statement to fulhamfctv.
“I definitely have faith that Fulham can stay up. That’s one of the reasons that I’m here, to try and help that to happen. I’m ready to go, I’m excited and I can’t wait.”
Babel scored double-digit goals for the first time in his career in 2017-18, firing 13 goals in Super Lig play and 15 total in all competitions.
Internationally, Babel has earned 54 caps while scoring eight goals.
“Ryan has excelled at playing attacking football on both the club and international stage, and we welcome that experience as we build our squad for a strong second-half push with nine important home fixtures remaining, beginning Sunday when Spurs visit the Cottage," club vice-chairman Tony Khan said of the signing.
“Ryan scored 15 goals across all competitions last season and arrives with the support of our manager.
"Claudio and I are confident that Ryan’s return to the Premier League here will be every bit as good for him as his addition will be good for our squad. Come on Fulham!”