Lawson is eligible for the postseason roster because Washington had a roster spot available. The Wizards open the Eastern Conference playoffs against the top-seeded Toronto Raptors on Saturday.
Lawson performed well with Shandong of the CBA, including 55 points in the final game of the regular season. Shandong advanced to the CBA playoffs but lost in the semifinals.
"Ty's experience and ability will give us extra depth in the backcourt during the playoffs," Wizards president Ernie Grunfeld said in a statement. "He's a veteran player who can score and distribute while bringing additional postseason experience."
Lawson, 30, was the 18th overall pick in the 2009 NBA draft out of North Carolina. He was one of the top young point guards in the NBA until issues -- including alcohol-related arrests -- derailed his tenure with the Denver Nuggets.
Lawson played six years with Denver, averaging 14.2 points and 6.6 assists, until he was traded to the Houston Rockets in 2015. He had stops with Indiana and Sacramento. Receiving no NBA offer this summer forced him to pursue a deal in China.
The Wizards also signed guard Ramon Sessions in mid-March. Washington's guard rotation includes All-Stars John Wall and Bradley Beal, as well as Tomas Satoransky, who started 30 games while Wall worked his way back from arthroscopic knee surgery.
Information from ESPN's Adrian Wojnarowski was used in this report.