The agreement includes incentives and is pending a physical, the source said.
Sources told ESPN The Magazine's Buster Olney that $2 million of the $8 million deal is deferred.
Guerrero, 35, hit .300 with 29 home runs and 115 RBIs last season with the Texas Rangers. He has a .320 career batting average with 436 home runs and 1,433 RBIs and received the 2004 AL MVP Award.
If he passes the physical, the nine-time All-Star would be the marquee offseason
acquisition by the Orioles, who have added several newcomers in
their bid to end a run of 13 consecutive losing seasons.
President of baseball operations Andy MacPhail has added through
trade or free agency third baseman Mark Reynolds, shortstop J.J.
Hardy, first baseman Derrek Lee, closer Kevin Gregg and starter
Guerrero provides Baltimore with a bonafide cleanup hitter.
Guerrero has a .320 career batting average and has scored 1,268
runs in 2,002 games. He broke into the major leagues with the
Montreal Expos and played six seasons with the Angels before
joining the Rangers in 2010.
Luke Scott, who led the Orioles with 27 homers last season, most
likely will be moved from designated hitter to left field.
Enrique Rojas is a reporter and columnist for ESPNdeportes.com. Buster Olney is a senior writer covering Major League Baseball for ESPN The Magazine.The Associated Press contributed to this report.