The contract includes a mutual/player option for 2015, performance and award bonuses and a limited no-trade clause.
To make room for Burnett on the 40-man roster, left-hander Joe Savery has been designated for assignment.
Burnett was 10-11 with a 3.30 ERA for Pittsburgh last season. The 37-year-old right-hander is 147-132 with a 3.99 ERA in 15 major league seasons. He helped the New York Yankees beat the Phillies in the 2009 World Series, winning Game 2 of the six-game series.
He gives the Phillies a formidable top three along with Cliff Lee and Cole Hamels, once Hamels is 100% healthy.
Last week, Phillies ace Cole Hamels said he won't be able to make his opening day start after feeling discomfort in his pitching arm during the offseason.
Kyle Kendrick is slotted to be fourth in the rotation. Roberto Hernandez, formerly known as Fausto Carmona, and Cuban righty Miguel Alfredo Gonzalez will compete for the fifth spot. Youngsters Jonathan Pettibone and Ethan Martin provide insurance.
The Associated Press contributed to this report.