The two-year deal is worth $10 million, according to multiple media reports. Smyly will get $3 million in 2018 and $7 million in 2019, when he is expected to return to action.
"Anything we get out of him next year will be sort of gravy," general manager Jed Hoyer said. "We'll rehab him and hopefully get him back to exactly where he was."
Hoyer is hoping Smyly can pitch out of the bullpen at some point in the 2018 season and then return to the rotation in 2019.
Smyly, 28, got hurt while with the Mariners in March after pitching for the United States team in the World Baseball Classic. He never ended up appearing in a game for Seattle.