The deal, which comes just three days after the Orioles signed former All-Star pitcher Ubaldo Jimenez to a lucrative four-year contract, is pending a physical and includes $750,000 in incentives.
Cruz, 33, would add another power bat to Baltimore's already impressive lineup, and make them even more competitive in the American League East.
The twice All-Star hit .266 with 27 homers and 76 runs batted in last season in 109 games for the Texas Rangers before accepting a 50-game suspension as one of 14 players implicated in the Biogenesis doping scandal.
Cruz, who rejected a one-year, $14.1 million qualifying offer from the Rangers in hopes of landing a rich multi-year deal that did not materialize, has a .268 batting average with 157 homers and 489 RBIs over nine seasons in the majors.
(Reporting by Mark Lamport-Stokes in Los Angeles; Editing by Larry Fine)