After first choice right-back Atsuto Uchida underwent knee surgery that will rule him out in the early stages of the new Bundesliga season, Reither is seen as an ideal replacement.
The 32-year-old was an integral part of the Wolfsburg side that won the 2008/09 Bundesliga season and was also capped twice by Germany later that year. Spells at Fulham and a return to his first club Freiberg followed.
After his transfer was confirmed, Riether told the club's official website: "Schalke are a huge club. I am delighted to be part of this club and I want to help the team to achieve their goals."
Schalke general manager Horst Heldt is happy with the club's newest signing, adding: "Sascha Riether is an experienced player who will be good for our young team.
"He's another alternative on the right side, as Atsuto Uchida is unfortunately still out for a while."