Young can earn another $1 million in incentives, sources said. He is expected to join the team Monday. Young worked out for the Bills at the beginning of the month.
Young, in a statement released Friday afternoon, thanked general manager Buddy Nix and coach Chan Gailey.
"I am looking forward to playing with the guys and helping where I am needed," Young said. "I have always respected the Bills organization and I am looking forward to being a part of the team."
Young spent last season with the Philadelphia Eagles. He struggled in six games, throwing for 866 yards, four touchdowns and nine interceptions. Young also had a career-low 60.8 passer rating in 2011.
"We think adding Vince to our roster will create more competition for the backup quarterback position," Nix said in a statement. "He brings with him some unique physical abilities that most are aware of and that will make the competition interesting. It's all about improving our team."
Young has had an up-and-down career since being selected third overall by the Tennessee Titans in the 2006 draft. He was the NFL's offensive rookie of the year, but lost his starting job on several occasions in Tennessee before the Titans ran out of patience with him.
"The guy's been to two Pro Bowls, he's 31-19 as a starter in this league," Nix said. "We think he can do that again. If he has to play, he can give us a chance to win the game or at least this: He will make Tyler (Thigpen) better."
Gailey said it's premature to determine what Young's role might be until the player takes the field for practice. The first opportunity for that will come May 29, when the Bills open a monthlong series of minicamps.
Gailey, however, dismissed questions regarding Young's struggles in Philadelphia and his inconsistencies in Tennessee.
"I don't know any of the circumstances surrounding what happened. All I know is he's a talented guy that said all the right things when he was here," Gailey said, referring to Young's workout last week. "So, I'm looking forward to working with him."
The traditionally cost-conscious Bills have been free spenders this offseason after signing free-agent defensive end Mario Williams to a six-year, $100 million deal, the most expensive contract awarded to an NFL defensive player. They were also able to re-sign starting receiver Stevie Johnson before he became a free agent. Last week, they also awarded starting running back Fred Jackson a two-year contract extension.
"I'm sure he can still play," Jackson said of Young. "He's another playmaker for us. I'm sure they'll find ways to get him in there to compete. It's another good signing for us, so we'll see what happens."
Information from ESPN NFL Insider Adam Schefter, ESPN.com's James Walker and The Associated Press was used in this report.