Tillman has spent his entire career with the Chicago Bears, who selected the Louisiana-Lafayette product in the second round of the 2003 draft. The Panthers turned to Tillman after losing Jacksonville Jaguars cornerback Alan Ball to the Bears.
The deal with Carolina reunites Tillman with coach Ron Rivera, who was Chicago's defensive coordinator from 2004 to 2006. Tillman, 34, had five interceptions in each of his final two seasons under Rivera.
"I think Coach Rivera was one of the main reasons why I wanted to be here," Tillman said in a team release. "He's a guy that I had a lot of respect for when I was in Chicago. I love his leadership and his qualities as a coach and he's done a good job with the Panthers.
Carolina defensive line coach Eric Washington and secondary coach Steve Wilks also were in Chicago with Tillman, the NFL's 2013 Walter Payton Man of the Year.
"Charles brings veteran leadership and experience, and has familiarity with both Ron and Steve," general manager Dave Gettleman said. "He is a high-character player that we are excited to add to our team."
If Tillman can be the every-down corner opposite Josh Norman, the Panthers will be free to move 2014 rookie Bene' Benwikere back to the nickelback spot.
Benwikere became the every-down corner with four games remaining last season after the Panthers released Antoine Cason. Carolina went 4-0 during those games.
Tillman has been limited to 10 games the past two seasons, tearing the triceps tendon in his right arm in the eighth game of the 2013 season and again in the second game last year.