The team made an official announcement one day after cutting Brian Russell, who started at safety for two seasons.
Milloy grew up in Tacoma, Wash., and played for the University of Washington before entering the NFL in 1996 with the New England Patriots. He played seven seasons there and three more with Buffalo, before spending the past three years in Atlanta.
The Seahawks finished last in the league in pass defense in 2008.
Seattle also claimed tackle Brandon Frye off waivers from Miami. Frye played seven games for the Dolphins last season. He entered the league in 2007 with Houston.
The Seahawks waived tackle Kyle Williams to make room on the 53-man roster for Frye.
The team said it will set its eight-man practice squad on Monday.