The team announced the move Wednesday, activating Sanchez while sending reliever Chad Green to AAA Scranton Wilkes-Barre.
Sanchez was placed on the injured list April 12 due to a calf injury. He began the season hitting six home runs in his first 11 games.
He was hitting .268 with a 1.065 OPS when placed on the injured list.
Green has struggled to start the season, his ERA is at 16.43 over 10 outings out of the bullpen. He allowed four earned runs in one-third of an inning Tuesday.
The previous two seasons Green had posted a 2.18 ERA pitching 144.2 innings as one of the top Yankee arms out of the pen.