Grimes' deal is worth $5.5 million, a league source told ESPN NFL Insider Adam Schefter.
Grimes, who made more than $10 million last season with the Atlanta Falcons, played in just one game in 2012 because of an Achilles injury suffered in the opener. He made the Pro Bowl in 2010 and was considered one of the top free agents left on the market.
Grimes, undrafted out of Shippensburg, has registered 13 interceptions over six seasons.
The Dolphins have been one of the busiest teams this offseason, landing wide receiver Mike Wallace, tight end Dustin Keller, linebackers Dannell Ellerbe and Philip Wheeler, and receiver Brandon Gibson.