Hawkins, who turned 35 last Friday, was 2-5 with a 3.42 ERA last season for the Colorado Rockies. He made $3.25 million and Colorado declined a $3.75 million option, choosing to pay a $250,000 buyout.
New York's middle relievers struggled last season, with Kyle Farnsworth and Luis Vizcaino pitching inconsistently for long stretches. The Yankees converted Joba Chamberlain, a starter in the minors, into a reliever for the final two months of the season. Chamberlain became Mariano Rivera's primary setup man, but New York plans on including Chamberlain in its starting rotation next year.
Vizcaino agreed to a $7.5 million, two-year contract with the NL champion Rockies this month.
Hawkins pitched for the Minnesota Twins from 1995-2003 and then moved on to the Chicago Cubs, San Francisco Giants, Baltimore Orioles and Rockies. He made five postseason appearances this year, allowing one run and one hit in five innings.
Hawkins has a 56-76 career record with 75 saves and a 4.68 ERA over 13 seasons in the majors.