Davis is known as a musical star maker, having launched the careers of Alicia Keys and Whitney Houston, among many others, People magazine noted. The label, 19 Recordings, is owned by Simon Fuller, who brought "American Idol" to Fox TV from Britain.
McPhee's first two singles will be "Over the Rainbow" and "My Destiny," available online and in stores June 27.
McPhee, 27, lives in Sherman Oaks, Calif.
A similar deal was announced last week for "American Idol" champion Taylor Hicks.