MLB.com and the YES Network reported New York sent catching prospect Jesus Montero to Seattle for the 22-year-old Pineda, who compiled a 9-10 record with a 3.74 ERA last year.
The hard-throwing, 6-foot-7, 260-pound native of the Dominican Republic struggled during the late stretches of last season, failing to win a game in the final two months.
Montero was described as one of baseball's top right-handed hitting prospects. The 22-year-old Venezuelan rapped out four homers with 12 RBI while batting .328 in 61 at-bats for New York last season.
Also going to the Yankees is 19-year-old pitcher Jose Campos, while 24-year-old right-hander Hector Noesi would move to Seattle in the four-player swap.