Sources told ESPN's Ed Werder that Owens received a one-year deal worth $1 million.
Owens had a very impressive workout Monday in Seattle, running the 40 in 4.45 seconds, according to sources.
On Monday night, Owens took to Twitter saying, "God is good. Thankful. Grateful. To ALL my new teammates & the "12th Man"... Let's Do This!!
Pete Carroll, Owens' new coach, also used Twitter to welcome the newest addition to his team, writing: "@terrellowens welcome to the land of the #12thMan Terrell, see you in the morning... 8am meetings!!"
Owens hasn't played in the NFL since the 2010 season with Cincinnati when he caught 72 passes for 983 yards and nine touchdowns.
The 38-year-old Owens didn't get any NFL offers to play last season after surgery on his left knee.
Expecting production from Owens might be a long shot based on recent history. According to ESPN Stats and Information, of the 187 NFL players with at least 20 catches last season, Donald Driver was the only one older than 35. Hines Ward and Tony Gonzalez each had more than 20 catches, but were just 35 last season.
Owens had 35 catches for 420 yards and 10 touchdowns while playing eight of 11 games for the Allen Wranglers of the Indoor Football League. He was released and lost an ownership stake in the team in May.
Owens is the latest veteran receiver the Seahawks have signed since training camp began. It started when the Seahawks brought in Antonio Bryant, but he was cut late last week. Seattle also signed Braylon Edwards, who played sparingly in 2011 with San Francisco during an injury-filled season. Now it's Owens getting his chance.
Seattle is seeking both insurance and a complement for Sidney Rice. Last season, Rice played in just nine games as he was sidelined by shoulder injuries and concussions. Rice had surgery on both shoulders in the offseason and is being held out of contact drills during training camp as the Seahawks try to get him to the start of the regular season healthy.
Additionally, the Seahawks cut No. 2 receiver Mike Williams in July, and Golden Tate, Doug Baldwin and Ben Obomanu, the Seahawks' main options for filling that role, don't fit Carroll's desire to have another tall receiver with a big frame.
Information from ESPN Stats and Information and The Associated Press was used in this report.