The 35-year-old free agent had 19 homers and 80 RBI in 148 games with the Chicago Cubs and Atlanta Braves in 2010. He has 312 career home runs, including 35 with the Cubs in 2009.
Luke Scott led the Orioles last season with 27 homers. First baseman Ty Wigginton (22) was the only other player to top 20. Lee has hit at least 20 home runs in nine of the past 11 seasons.
The two-time NL All-Star and three-time Gold Glove winner signed the contract after passing a physical.
Lee fills the void left by the departure of Wigginton, who signed as a free agent with the Colorado Rockies.
BREWERS: Milwaukee finalized a $1.75 million, one-year contract with reliever Takashi Saito .
The right-hander can earn an additional $1 million in performance bonuses based on games and $500,000 for days on the active roster.
He was 2-3 with a 2.83 ERA in 56 games for the Atlanta Braves last year and has a 17-13 big league record with a 2.19 ERA in five seasons with the Los Angeles Dodgers, Boston and Atlanta.
The 40-year-old from Japan has 84 saves, including 81 with the Dodgers from 2006-08.
PHILLIES: Philadelphia re-signed left-handed relief specialist J.C. Romero to a one-year, $1.35 million contract.
The 34-year-old Romero was 1-0 with three saves and a 3.68 ERA in 60 appearances for Philadelphia last season.
INDIANS: Cleveland added outfielder Austin Kearns to its 40-man roster by designating outfielder Jordan Brown for assignment.
Kearns re-signed with the Indians in December.