Graham was selected to the Pro Bowl last season based on his special teams prowess, but also saw time at nickel back, where he intercepted three passes.
"I believe it's a better situation for me and a better opportunity with a fresh start," Graham told the Chicago Tribune, which initially reported the signing. "I gave the Bears every opportunity but they moved on. All around, Baltimore is just a better deal for me and my family."
The Ravens have also agreed to a three-year contract with special teams player Brendon Ayanbadejo.
Graham has been credited with more than 20 special teams tackles in four of his five NFL seasons.
Graham started nine games at cornerback for the Bears in 2009, but failed to consistently crack the starting lineup the next three years. He considered leaving the Bears last year but eventually returned on a one-year deal.
The 35-year-old Ayanbadejo finished second on the Ravens last season with nine special teams tackles. He has 173 career special-teams tackles and has been selected to three Pro Bowls.
As a reserve inside linebacker, Ayanbadejo had 27 tackles, 1½ sacks and one fumble recovery in 2011.
The Ravens also re-signed starting inside linebacker Jameel McClain.
Information from The Associated Press was used in this report.