Williams, 34, is to undergo a physical examination Tuesday but the team said Monday the running back had agreed to a multiyear contract.
The Baltimore Sun said the agreement is a two-year deal worth up to $4 million.
Williams was the fifth pick of the New Orleans Saints -- who traded all of the team's other draft choices that year for the right to select Williams -- in 1999 after winning the Heisman Trophy as a running back at Texas.
Williams played three seasons with New Orleans before joining the Miami Dolphins, with whom he led the NFL in rushing in 2002 with 1,853 yards. He had 1,372 rushing yards in 2003 but retired before the 2004 season.
He rejoined the Dolphins in 2005 but sat out 2006 after a fourth violation for the NFL's drug policy. He played that year for Toronto of the CFL and went back to the Dolphins in 2007. He's played each of the 16 games the last three seasons.
In a 131-game NFL career, Williams has rushed for 9,565 yards and 64 touchdowns.