Guerrero is guaranteed $6 million in the deal, which is pending a physical. It includes $5 million plus performance incentives for 2010 and a $1 million buyout if the Rangers don't pick up the option, a source said.
Guerrero fills the Rangers' need for a right-handed bat in the middle of the lineup and will likely be the club's designated hitter.
Guerrero, who turns 35 in February, played in 100 games for the Los Angeles Angels in 2009, most of them at DH. He hit .295, his lowest average for any full season in the majors, but also added 15 homers and 50 RBIs. He also had a .334 on-base percentage, well below his career numbers.
The aging slugger is a .394 career hitter at Rangers Ballpark, with 14 homers and 33 RBIs in 50 games.
The Angels showed little interest this offseason in retaining Guerrero, who had two stints on the disabled list in 2009 and turns 35 in February. Los Angeles signed free-agent slugger Hideki Matsui and kept Bobby Abreu with a $19 million, two-year contract, leaving no room for Guerrero in the lineup.
Texas finished second in the West last year, 10 games behind Los Angeles.
Guerrero, who spent six seasons with the Angels, is a career .321 hitter with 407 homers and 1,318 RBIs over 14 years in the majors.
In the first 44 games of his career against the Rangers (2004-06), Guerrero had one of baseball's most peculiar streaks. He had a 44-game hitting streak, the longest stretch by any player against one team since at least 1957.
ESPNDallas.com's Richard Durrett and The Associated Press contributed to this report.