Sanchez, 30, will report to Triple-A Albuquerque, but has an opt-out clause in the deal if he's not in the major leagues on July 1.
The signing was first reported by ESPN's Pedro Gomez. The Dodgers have used nine starting pitchers this season. Their No. 2 starter, Zack Greinke, came off the disabled list to pitch Wednesday night against the Washington Nationals. Chad Billingsley is out for the season after undergoing Tommy John surgery, Ted Lilly (back) is on the DL and Josh Beckett was placed on it Wednesday because of a strained groin.
Sanchez, a left-hander, was 0-3 with an 11.85 ERA in five games when he was released by the Pittsburgh Pirates in April. Sanchez pitched in the 2010 World Series for the San Francisco Giants and is a career 39-58 with a 4.70 ERA.