The move was announced Tuesday.
An experienced and dependable fill-in, Chavez batted .301 with five homers and 27 RBIs in 83 games for the AL champion Texas Rangers last season.
Dan Duquette, the Orioles' new executive vice president of baseball operations, says Chavez is a "tremendous defender" who gives the team "needed depth" in the outfield. Chavez can earn an additional $500,000 in performance bonuses.
A left-handed hitter with speed, the 33-year-old Chavez is a .274 career hitter in 10 major league seasons with Kansas City, Montreal/Washington, Philadelphia, the New York Mets, Seattle and Texas. He is best known for his spectacular catch with the Mets in Game 7 of the 2006 NL championship series against St. Louis.