Joselu, who sensationally struck twice late on against Bayern Munich to fire Madrid into the Champions League final, which they won for a record 15th time, was on a temporary deal this season at the Santiago Bernabeu.
"Real Madrid, after activating their option to sign Joselu from Espanyol, reached a deal with Al-Gharafa for the transfer of our player," said Los Blancos in a statement.
Joselu's loan clause was estimated at 1.5 million euros (£1.27 million) and Spanish reports say Madrid sold him for the same amount, with Espanyol not willing to allow him to move to the Qatari league at that price.
The 34-year-old target man netted 18 times in 49 appearances for Real Madrid despite often being used as a substitute.
Joselu is part of Spain's Euro 2024 squad along with defender Nacho Fernandez, who on Thursday sealed a move to Saudi Arabian side Al-Qadsiah at the end of his Real Madrid deal.
