Kruse returns to Germany after having previously played for Bayer Leverkusen, VfB Stuttgart and Fortuna Dusseldorf.
The 28 year-old has been without a club since May, when he and fellow Aussie James Holland terminated their contracts with Chinese side Liaoning.
The 53-time Socceroo will be keen to play regular football, given the upcoming 2018 FIFA World Cup in Russia, and Socceroos coach Ange Postecoglou's insistence that players who wished to be selected do so.
Christian Hochstätter, VfL's sporting director, is convinced of Kruse's qualities - who did impress during the recent Confederations Cup in Russia.
"Robbie Kruse is a very fast player, who predominately plays as a winger and thus fits perfectly into what we required.
"We have watched him for a long time, and he has finally been able to present himself at the Confederations Cup to a larger public.
"Through his time in the Bundesliga, he knows what is required in Germany, also with regard to the playing methods in the 2. Bundesliga.
"He speaks German, so the integration is not a problem."
Kruse said he was glad to return to Germany.
"The club is absolutely professional, the stadium is great, the atmosphere here is really good. I know that from the encounters I had against the VfL," Kruse said.
"The club has high goals and I hope I can do my part to meet these ambitions."
VfL finished ninth last season, having played in the 2.Bundesliga for 8 years after being relegated from the first division in 2010.