The 32-year-old defender, who has been released by Ahli last month, is looking to end his career in Alexandria.
"I decided to join Ittihad. I will hold a press conference after signing tomorrow," Shadi told FilGoal.com.
"I had other options but I want to seal my career in my homeland Alexandria and I hope I can help Ittihad win trophies.
"I am also looking forward to working with Taha Basri."
Shadi had a glittering spell with Ahli after signing from Koroum 11 years ago, but his exit from the Cairo club was far from satisfactory.
The Egypt international's relationship with ex-Ahli boss Manuel Jose became frosty just before the latter had left to take charge of Angola in May.
Shadi played a pivotal role with the Reds in recent years, and he is the highest trophy-winning captain in the club's history.