The former Stoke City hit-man joins the Bundesliga Zwei club on a two-year contract, with an option, after agreeing terms on Tuesday.
The move ends the big Scot's search for a new contract this summer after he ended last season with Brighton & Hove Albion by helping them into the English Football League Championship with a play-off win over Bristol City back in May.
Despite reports that Iwelumo was in talks with English League One sides Milton Keynes Dons and Doncaster Rovers, the marksman has opted to join the ambitious German club and help them win promotion to Germany's top-flight this season.
Alemannia made headlines last season when they reached the final of the DFB Pokal (German Cup) before losing to Werder Bremen, who did the League and Cup double last term.
Having taken scalps such as Bayern Munich and Borussia Monchengladbach to reach the final, Alemannia's reward for their Cup run will be participation in this season's Uefa Cup.
