Toronto selected the contract of the 29-year-old from Triple-A Buffalo and placed right-hander Yennsy Diaz on the 60-day injured list with a right lat strain.
Panik gets a one-year contract paying a $2.85 million salary while in the major leagues and a $195,000 salary in the minors. He can earn $150,000 in performance bonuses based on plate appearances: $50,000 each for 400, 450 and 500 plate appearances.
Panik hit .381 with a triple, two home runs and five RBIs in 21 at-bats over 10 spring training games. The left-handed hitter batted .244 with five homers and 39 RBI in 438 at-bats last year for the San Francisco Giants and New York Mets.
Panik became a free agent after the season and agreed to a minor league deal with the Blue Jays in January.
He has a .271 average with 38 homers and 233 RBI in six seasons with the Giants and Mets. He was an All-Star in 2015.
Diaz, 23, was 11-9 with a 3.74 ERA last year in 24 starts and two relief appearances for Double-A New Hampshire. He pitched two-thirds of an inning for Toronto at Baltimore on Aug. 4 in his big league debut, his only major league appearance.