He hit .201 with eight home runs and 26 RBI in 62 appearances for the Bronx Bombers. Carter led baseball with 206 strikeouts in 2016, but also hit a National League-high 41 home runs.
He hit just .222 last season for the Milwaukee Brewers before wearing the pinstripes.
Carter also led the league with 212 strikeouts in 2013 as a member of the Houston Astros.
The move comes amid trade rumors, with the Yankees being linked to Miami Marlins first baseman Justin Bour. A source told the Miami Herald this week that the Yankees are pursing a trade for Bour. That report also stated that the Marlins wouldn't just "give away" the slugger. Bour is raking for a career-best .286 batting average and has 20 home runs and 57 RBI at the break. He is under Marlins control through 2020 and is only making $552,500 this season as part of an inexpensive pact.
The Yankees are still looking for a replacement first baseman after Greg Bird hit a slump and then got injured. Carter provided lackluster numbers in that spot.
New York called up Ji-Man Choi from Triple-A in a corresponding move earlier this week.
Choi, 26, had two home runs in his first two games after being called up. He is 0-4 in his last two appearances.