At 16, Iraheta was the youngest contestant ever to make it to the "Idol" Top 12. She was among Season 8's Top 4 before she was eliminated from the competition.
Her debut album is slated for release this fall, her record label said.
"I think I'm still in shock that this is happening -- getting to record my first album and this whole awesome experience is a dream come true," the now-17-year-old singer said in a statement.
Simon Fuller, creator and executive producer of "American Idol," and founder and chief executive officer of 19 Entertainment, added: "Allison is an incredible young singer. She is without a doubt one of the best teenage singers 'American Idol' has ever discovered. We all watched Allison grow in confidence and stature as she performed each week on the show and we can only imagine how far this special girl can continue to blossom in the years ahead."
"Allison was an absolute stand-out this season," RCA/JIVE Label Group's Chairman and Chief Executive Officer Barry Weiss said. "Her bluesy, powerful voice, spunky attitude, and edgy star power immediately captivated us and it didn't matter where she ranked on 'Idol,' we knew we wanted her to join our amazing crop of young talent at Jive."
N.J. man wakes up from 10-hour sleep with knife in back
Sign language interpreter at Mandela service called out as fake on Twitter