The New York Daily News and MLB.com reported the deal was done pending a physical for Ellsbury, who was a fan favorite and mainstay of the rival Boston Red Sox.
A source told MLB.com the 30-year-old Ellsbury's new contract would guarantee him $153 million through 2020 with an option for an eighth year.
Ellsbury should re-energize the Yankees' offense. He hit .298 for the World Series champion Red Sox last season with nine home runs, 53 RBI and an American League-leading 52 stolen bases. He is a lifetime .297 hitter since breaking in with the Red Sox in 2007.
The defection would leave Boston in search of a leadoff batter and left fielder.