Mariners general manager Jack Zduriencik said during a conference call Monday that Millwood will have a chance to compete for a spot in the rotation.
Millwood, 37, gets a $1 million salary if he makes Seattle's 40-man roster, and he can earn an additional $750,000 in performance bonuses.
An All-Star in 1999, the right-hander has a 163-140 career record with a 4.10 ERA. Millwood's major league time last year was limited to a late-season stint with Colorado. He went 4-3 with a 3.98 ERA in nine starts.
In Seattle, Millwood will be reunited with manager Eric Wedge and pitching coach Carl Willis. They were with Cleveland when Millwood pitched for the Indians in 2005.