The Yankees said Saturday that Wang would report right away to the minor league complex.
Wang, who turns 33 later this month, was originally signed by the Yankees in 2000. He went 55-26 with them during five seasons, and was a 19-game winner in consecutive years.
Wang has been slowed by several injuries since then, starting when he injured his foot while running the bases in 2008.
The right-hander from Taiwan went 2-6 with a 6.68 ERA in 10 games with Washington last year. He spent the last three seasons with the Nationals.