The 37-year-old Velasquez debuted with the company last Friday night, attacking former UFC rival Brock Lesnar in the closing minutes of the premiere episode of WWE SmackDown on FOX.
Specific terms of Velasquez's contract were not disclosed as of press time.
Velasquez has informed UFC of his intention to withdraw from the US Anti-Doping Agency (USADA) testing pool, effectively retiring from mixed martial arts after a career that spanned 13 years.
Velasquez's last UFC fight took place in February of this year, losing via TKO to Francis Ngannou in 26 seconds.
With his departure from UFC and apparent retirement, Velasquez finishes his MMA career with a record of 14 wins and three losses.
Velasquez rose to prominence at UFC 121 in October 2010, when he defeated then-UFC Heavyweight champion Lesnar via TKO at 4:12 of the first round to capture the belt.
The two are set to face off at WWE Crown Jewel on October 31. It has not been made clear if Lesnar's WWE Championship will be on the line.