He was released in May by the Chicago Bears.
McQuarters, who also is adept as a punt returner, played for the Bears for five seasons, where he recorded 295 tackles, nine interceptions and three touchdowns.
His signing is expected to end the Lions' chase for another coveted free agent, Ty Law, who was released by Super Bowl champion New England.
"I love Ty Law and I want to think I would still consider him, but right now, with where we're at, I wanted to make sure I'm getting something," Lions President Matt Millen told the Detroit Free Press.
McQuarters was a first-round draft pick by San Francisco in 1998 and out of Oklahoma State and played for the 49ers five seasons. He is the fourth-leading punt returner in Bears' history with a 10.6 yard average and two scores.