Ibanez, 39, could earn up to $4 million with included plate appearance incentives. The Yankees see Ibanez as their primary designated hitter against right-handed pitching, with Andruw Jones facing left-handers.
"We plan on DHing him, we plan on putting him in the outfield as well," Yankees manager Joe Girardi said. "We've talked about trying to give some guys a DH day or a rest day. It gives you more flexibility because he can play the outfield as well."
Ibanez batted .245 with 20 home runs and 84 RBIs in 144 games for the Phillies last season. Yankees hitting coach Kevin Long offered rave reviews of the 16-year big league veteran, whom Long knows from their time together in the Kansas City Royals organization.
"He's a perfect fit for us," Long said. "His professionalism, the way he goes about it, he's an RBI machine. He can hit. It's a nice addition. What he brings to the table, he's just a terrific human being who brings a professionalism about him that you don't find out there every day. I'm glad we got him; glad we picked him up. He's going to be a big help."
The Yankees pursued Ibanez over choices like Johnny Damon, Hideki Matsui and Vladimir Guerrero -- all of whom expressed interest in playing for the Yankees -- because of Ibanez's ability to help on defense. For example, Girardi said that he could see a situation where Ibanez plays left field on a day that Curtis Granderson is the DH, moving Brett Gardner to center field.
"It just gives me some good flexibility," Girardi said. "If you wanted to DH [Mark Teixeira], you could move [Nick Swisher] to first if you wanted, or move [Eric] Chavez to first. If you move Swish to first, you could put Ibanez in right. There's a lot of different things you can do."