A source told ESPNdeportes.com that Cruz's deal also includes $750,000 in incentives. If the deal is completed, Cruz would become the Orioles' primary designated hitter.
Cruz, 33, is one of several free agents whose signability has been hurt this offseason because they turned down qualifying offers from their previous teams, meaning the club signing them would lose a top draft pick.
However, the Orioles surrendered their first-round pick earlier this week when they signed pitcher Ubaldo Jimenez. So signing Cruz would only cost Baltimore a second-round pick -- the 55th overall choice in the 2014 draft.
The Orioles also had previously lost a "competitive-balance pick" between the first and second rounds, because they included it in last July's trade with Houston for pitcher Bud Norris.
Cruz also has been linked to the Seattle Mariners, New York Mets and his former team, the Texas Rangers. Meanwhile, the Orioles have been talking to both Cruz and free agent first baseman Kendrys Morales, but have zeroed in on Cruz in recent days.
Cruz batted .266 with 27 home runs and 76 RBIs in 109 games with the Rangers last season before serving a 50-game suspension for his involvement in the Biogenesis scandal.
CBSSports.com reported earlier Saturday that Cruz and the Orioles were close to a deal.
Cruz, who has spent the last eight seasons with the Rangers, is one of seven right-handed hitters in baseball who have hit at least 20 home runs in each of the last five seasons. The others are Miguel Cabrera, Alfonso Soriano, Matt Holliday, Mike Napoli, Mark Reynolds and Hunter Pence.
Information from Enrique Rojas of ESPNdeportes.com was used in this report.