Tejada, 35, is expected to take a physical in the next few days to finalize the deal.
He played for the Houston Astros the past two seasons after spending the previous four with Baltimore.
He was traded to the Astros following the 2007 season for five players, including current DH Luke Scott.
"It was just the best thing for our organization at the time," second baseman Brian Roberts said on the Orioles' Web site. "Now it's kind of 360 degrees, right back to where we were."
Tejada, normally a shortstop, likely will be Baltimore's third baseman next season.
He has played in at least 158 games in 10 of the last 11 seasons, including all 162 in six straight years from 2001-06.
The 2002 AL MVP with Oakland is a career .289 hitter with 285 homers and 1,185 RBI.