The Orioles announced the deal with the free agent Tuesday and say it includes a vesting option for 2014.
Betemit will receive a $500,000 signing bonus and earn $1 million this season and $1.75 million in 2013. A $3.2 million option for 2014 becomes guaranteed if he has a combined 700 plate appearances over the first two seasons.
The switch-hitting Betemit batted .285 with eight homers and 46 RBIs in 97 games for Kansas City and Detroit last season. In nine big league seasons with six teams, Betemit has hit .269 with 63 homers and 243 RBIs.
To make room for Betemit on the 40-man roster, the Orioles designated RHP Rick VandenHurk for assignment.