The team did not disclose terms of the deal for Farmar, who averaged 9.2 points, 3.1 assists and 2.1 rebounds in 12 games with coach Dave Joerger and the Memphis Grizzlies last season.
Joerger is now with the Kings and the 29-year-old Farmer's value could rise as anointed starter Darren Collison pled guilty to a domestic violence charge. Collison is likely to face a lengthy suspension to begin the season.
Ty Lawson and Isaiah Cousins can also play the point on Sacramento's roster.
Farmar has averaged 7.7 points, 2.9 assists and 1.9 rebounds per game since being selected by the Los Angeles Lakers with the 26th overall pick of the 2006 draft. The 6-foot-2 Farmar is a two-time NBA champion with the Lakers in 2009 and 2010.