Chavez and the Yankees have agreed to a one-year, $900,000 contract that includes bonuses for performance incentives, MLB.com has confirmed.
The deal was first reported by MLB Network and CBS Sports analyst Jon Heyman and has not been officially announced by the club because Chavez must first pass a physical.
Earlier in the day, Girardi mentioned Chavez as one of his backup first-base options before quickly realizing his error and clarifying that a deal was not yet finalized.
"We don't have him, but there has been talk about him," Girardi said, adding, "I'd like to have him back. I thought he was productive for us and he gives me flexibility."
The Yankees had been negotiating with Chavez, 34, envisioning him as a solid option to back up Alex Rodriguez at third base and Mark Teixeira at first base.
In fact, his locker next to Nick Swisher at George M. Steinbrenner Field had remained vacant, an indication that he was eventually expected to arrive in camp.
Girardi said that he does not view Chavez as one of the Yankees' primary designated hitters. Those roles will be filled by Raul Ibanez against right-handed pitchers and Andruw Jones against lefties.
A six-time Rawlings Gold Glove award winner at third base and an American League All-Star for four consecutive seasons beginning in 2002, when he starred for the Athletics, Chavez will likely be the final addition to the roster before position players report to camp on Friday.
While the Yankees had interest in Chavez dating back to before December's Winter Meetings, the Yankees were most recently waiting to complete the trade of A.J. Burnett to the Pirates before further pursuing Chavez.