The deal is pending a physical.
Since coming to Baltimore, the 6-foot-4, 220-pound righty known for his submarine delivery has become one of the game's premier setup men. O'Day has appeared in at least 68 games in each of his four seasons with the Orioles, including 2015, when he went 6-2 with six saves and a 1.52 ERA and was voted to the All-Star Game for the first time in his career.
O'Day, 33, was signed as an amateur free agent by the Angels in 2006.
After making his big league debut with the Angels in 2008, he was selected by the Mets in the Rule 5 draft following that season. In April 2009, he was designated for assignment, then claimed by the Rangers.
In three seasons with Texas, O'Day had a 2.41 ERA and a 0.97 WHIP in 152 appearances. After the 2011 season, O'Day was claimed off waivers by the Orioles.
ESPN's Jerry Crasnick and Eddie Matz contributed to this report.