The left-hander agreed to a $36 million, three-year contract on Friday, returning to the team he pitched for from 2012 to '14. He will get $13 million in each of the final two seasons.
Happ fills another rotation spot for the AL East champions, who could lose fellow lefties David Price and Mark Buehrle in free agency this offseason. Perhaps the biggest prize on the market, Price is expected to command a huge deal.
Earlier this month, Toronto re-signed right-hander Marco Estrada to a $26 million, two-year contract.
The 33-year-old Happ was 11-8 with a 3.61 ERA in 31 starts for Seattle and Pittsburgh in 2015, setting career highs with 172 innings and 151 strikeouts. He was especially effective after getting traded to the Pirates in July, going 7-2 with a 1.85 ERA in 11 starts down the stretch to help them earn an NL wild card.
Happ went 19-20 with a 4.39 ERA in 58 games, including 50 starts, over 2 1/2 seasons previously with the Blue Jays.
He also has pitched for Philadelphia and Houston, compiling a 62-61 record with a 4.13 ERA in 196 major league outings (171 starts).