The contract has a maximum value of $30 million with $7.5 million guaranteed and $8.5 million in the first year, according to ESPN.
Peppers, 34, was cut after the Bears were unable to trade him.
He was due an $11.9 million base salary, so it was nearly impossible to trade him.
Peppers had seven sacks last season. He has 37.5 sacks since joining the Bears four seaons ago.
The former Carolina Panthers star has 118.5 career sacks.
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Aaron Wilson covers the Ravens for The Baltimore Sun