A source told ESPN.com's Pierre LeBrun that the deal is worth $570,000.
The 35-year-old goalie, who had spent his entire NHL career with the San Jose Sharks, must now clear waivers to join the Red Wings because he started the season playing in Russia's Kontinental Hockey League.
He went on waivers at noon ET Friday; the waiver period ends at noon ET Saturday.
The Sharks didn't offer Nabokov a contract to play this season. He made $6 million last season -- when he went 44-26 with a 2.43 goals-against average -- in the final year of his
Nabokov signed a four-year deal with SKA St. Petersburg, but the two mutually parted ways in mid-December, with Nabokov citing family reasons.
Howard returned to the lineup Thursday night in St. Louis after missing two games. He made 26 saves in the Red Wings' 4-3 overtime victory.
"I don't need anyone to push me. I push myself. I practice hard," Howard said after the game when asked about Nabokov. "It's out of my hands. If he can help us, he can help us."
Howard, 26, is in his second full season with Detroit, and is 23-7 with a 2.83 GAA. The Red Wings entered play Friday with the NHL's third-best record, but they have had to scramble lately because of injuries in goal.
Howard bruised his knee in the first period Jan. 14 against Columbus. Joey MacDonald started this week at Pittsburgh, and the Red Wings lost 4-1.
The team said Friday it had recalled goalie Jordan Pearce from AHL Grand Rapids -- and loaned MacDonald to Grand Rapids in order to make room for Pearce on the active roster.
Information from ESPN.com's Pierre LeBrun and The Associated Press was used in this report.