Romero recently signed a minor league deal with the Washington Nationals under the impression that he would be promoted to the majors by July 15, but Washington released him.
Romero had hoped the Nationals would cut him loose so he could sign with the Yankees.
The 35-year-old left-hander pitched in 24 games for the Phillies earlier this season. The Yankees have been seeking left-handed relief help in the aftermath of the season-ending injury to Pedro Feliciano.
Romero has logged 13 seasons in the majors with the Twins, Angels, Red Sox and Phillies. He has a 4.07 ERA in 641 innings.
He was suspended 50 games prior to the 2009 season for testing positive for performance-enhancing drugs.
Buster Olney is a senior baseball writer for ESPN The Magazine.