Update: As several commenters have pointed out, Android does support some right-to-left languages like Arabic out of the box, it just doesn't do so correctly. The method described below does.

Surprising as it may be that Android, which is now a major player in the mobile operating system game, does not ship with support for any right-to-left languages such as Arabic, Persian, or Urdu, there's no denying it; languages were never one of Android's strengths.

Well, at long last, it appears our beloved operating system is getting support for at least one of those three languages (Arabic), but, surprisingly enough, Google was not involved. Instead, Arabic-speaking users can thank Ayman Al-Sanad for his hard work on this project.

Before getting your lab coat ready and your mad scientist glasses on, there are a few things you should know:

  • it only works with FroYo
  • right-to-left alignment is only supported on the following devices, at least for now:
    • the Google/HTC Nexus One
    • the HTC Desire
    • the HTC Magic / G1
    • the HTC EVO 4G
    • the HTC Droid Incredible
  • if your device is running FroYo but is not one of the above devices (e.g. Motorola Droid 2, Droid X), there is also a universal version that does not include right-to-left text alignment
  • your phone needs to be rooted for this to work

Once you're ready to begin, here's what to do:

  1. Download the zip file that's right for you device from here. It should contain all the necessary libraries.
  2. Plug your phone into your computer and mount it as a USB drive.
  3. Move the file you just downloaded to the root of your microSD card (that's the main folder).
  4. Reboot into bootloader mode.
  5. Press volume down to hover over "recovery," then press the power button to confirm.
  6. Once you have booted into recovery mode, keep pressing volume down until "install zip from sdcard" is selected. Then press the power button to confirm.
  7. Now press volume down to select "choose zip from sdcard." Press the power button, then keep pressing volume down until "froyo_name of your device_libs_arabic_android_plus_signed.zip" is selected. Press the power button to confirm.
  8. Finally, repeatedly press volume down until "-Yes - Install "froyo_name of your device_libs_arabic_android_plus_signed.zip" is selected. Press the power button to confirm.
  9. After it finishes flashing, select "reboot system now."
  10. After rebooting, all text on your device should be written in Arabic!

You can also install the Arabic Android app for this, although from what I can see, it will have the exact same results, the only difference being that the method described above is free, while the app is paid.

Source: Arabic Android via xda-developers