Financial terms of the deal were not disclosed by the KHL but according to multiple reports the 30-year-old Russian's deal with SKA could be worth up to $15 million per season.
"It gives us great pleasure to confirm that Ilya Kovalchuk has exercised his legal right to continue his hockey career outside the NHL and has signed a contract with SKA Saint Petersburg," KHL president Alexander Madvedev said in a statement.
"I should mention that the agreement fully complies with all KHL and NHL regulations, and is in complete accordance with the existing Memorandum of Understanding between the leagues."
Kovalchuk stunned the hockey world last week when he walked away from the $77 million he still had owing on the 15-year, $100 million contract he signed with the Devils in 2010.
His signing with SKA represents a major coup for the KHL, adding to the league's credibility as a rival to the NHL.
Taken with the first pick in the 2001 draft by the Atlanta Thrashers, Kovalchuk quickly established himself has one of the league's top scoring threats. He twice topped 50 goals in a season and on four other occasions potted more than 40.
Over 11 NHL seasons with Atlanta and New Jersey, the three time All-Star collected 816 points (417 goals, 399 assists) in 816 games.
Kovalchuk claimed the Maurice "Rocket" Richard Trophy as the NHL's leading goal scorer with 41 tallies in the 2003-04 season but never won a Stanley Cup.
He spent part of last season in Russia playing with SKA while NHL owners and players battled over a new collective bargaining agreement.
Kovalchuk, who has represented Russia at three Winter Game, is expected to be a key member of the country's Olympic team again next year at the Sochi Winter Games.
Center Josh Bailey has agreed to terms on a five-year contract with the New York Islanders.
Financial terms were not announced, ESPN reported the deal is worth $16.5 million, with a cap hit of $3.3 million.
Bailey, 23, had 11 goals and eight assists in 38 games this past season.
Former Philadelphia Flyers goalie Ron Hextall is back with the Flyers as their assistant general manager.
Hextall, 49, was the Los Angeles Kings' assistant general manager since 2005-06.
Montreal Canadiens 25-year-old forward Blake Geoffrion announced his retirement as a result of a serious head injury he sustained while playing in the NHL in November.
The Detroit Red Wings avoided arbitration with defenseman Brendan Smith, who agreed to a two-year deal, the team announced. CBC reported the deal is worth $2.525 million.
The Florida Panthers reached agreement on a two-year deal with goalie Jacob Markstrom, the Miami Herald reported.
The contract for Markstrom, 23, is a two-way deal in 2013-14 and a one-way deal in 2014-15.
The Tampa Bay Lightning re-signed forward J.T. Brown to a one-year, two-way contract.
Brown, 23, had 10 goals and 18 assists with 27 penalty minutes in 51 games last season with the Syracuse Crunch of the American Hockey League.
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