ESPN.com reported the Lions will receive a conditional seventh-round draft pick in 2019.
Spence will be reunited with former Lions defensive line coach Kris Kocurek, who was hired by the Dolphins.
"Happy to be back with coach Kris doing what I know how to do best," Spence told ESPN in a text message. "Couldn't ask for a better situation."
The Lions signed Spence to a three-year, $9 million deal as a free agent last offseason.
Earlier Thursday, ESPN Insider Field Yates reported Spence took a pay cut from the Lions. His $3.15 million base salary for 2018 was reduced to $2.575 million with the chance to earn some of it back. Spence had earned $750,000 in escalator bonuses to his base salary for 2018 based on his play last season.
He started 11 games for the Lions in 2017, recording a career-high 39 tackles, three sacks and a forced fumble.
Spence, 26, played his first four NFL seasons with the Tampa Bay Buccaneers after being a fourth-round pick in the 2013 NFL Draft.
He has 8.5 career sacks and 135 tackles in his five-year NFL career.
Apparently he did not fit into the plans of new Lions head coach Matt Patricia.