The eight-year veteran comes to Seattle on the same day the team revealed it had also agreed to a seven-year deal with fellow starter Felix Hernandez.
Terms of Saunders' contract weren't disclosed. It includes a mutual option for 2014.
The left-hander split last season between Arizona and Baltimore, finishing with a 9-13 record and 4.07 ERA over 28 starts. He also made pair of post-season starts for the Orioles, going 1-0 with a 1.59 ERA over 11 1/3 innings.
Saunders sports a 78-65 career record with a 4.15 ERA while hurling for the Los Angeles Angels, Arizona and Baltimore.
First baseman/designated hitter Mike Carp was designated for assignment to make room on the Mariners' 40-man roster.