Furcal finalized his decision late in the afternoon, a person familiar with the negotiations told The Associated Press. The person spoke on the condition of anonymity because the deal was still not yet official.
A day earlier, Furcal had been close to accepting a $30 million, three-year offer from the Atlanta Braves, his original major league team.
Furcal gets $7.5 million next season, $9.5 million in 2010 and $13 million in 2011. The deal includes a $13 million team option for 2012 with a $3 million buyout, and the option could become guaranteed depending on his performance.
The 31-year-old Furcal, coming off a $39 million, three-year deal with the Dodgers, played for the Braves from 2000-05.
He hit .357 with five homers and 16 RBIs last season but was limited to 36 games and 143 at-bats by back problems. He had back surgery July 3 and was sidelined until the season's final week, but started each of the Dodgers' eight postseason games, hitting .258 with one homer, three RBIs and nine runs scored.
Furcal was hitting .366 through May 5 before injuring his back. He reached base in his first 30 games of the season, becoming the first Dodger to accomplish that feat since Duke Snider in his first 34 games of the 1955 season.
Earlier Wednesday, Kinzer said Furcal had never accepted the Braves' offer.
"They know we didn't have a signed contract, that we didn't have even a verbal agreement. We had, 'Things look very good and Raffy's going to sleep on it,'" Kinzer said after a news conference for another client, Francisco Rodriguez.
Furcal still owns a home in the Atlanta area, but owns another in nearby La Canada Flintridge as well.
Los Angeles hesitated to make an offer of more than two years because of Furcal's medical history, but general manager Ned Colletti has been saying for weeks that signing the shortstop was his immediate top priority.
Colletti can turn his attention to pitching and free-agent outfielder Manny Ramirez. A pair of Los Angeles starters, Derek Lowe and Brad Penny, became free agents.