by Ken Rosenthal

The deal was completed after Saito passed his physical on Friday. It includes a guarantee between $1.5 million and $2.5 million, the sources said, and Saito will have the chance to earn more than $7 million if he reaches all of his incentives.

If healthy, Saito could emerge as a late-inning complement to closer Jonathan Papelbon.

Red Sox general manager Theo Epstein confirmed the deal during a conference call with The Associated Press.

"He's done an amazing job since coming over from Japan three years ago," Epstein said. "If you look at his performance and how he's gone about it the last three years, he's been just about as good as anyone in baseball."

Saito, who turns 39 on Feb. 14, spent the past three seasons as the Dodgers closer. He missed significant time last season with a sprained ligament in his elbow and the Dodgers did not offer him a contract for 2009, making him a free agent.

"I'm very excited; obviously there is excitement playing for a new team," Saito said. "I know that obviously Daisuke (Matsuzaka) and (Hideki) Okajima are there right now and I've met them several times in the past. I also understand that there is a lot of Japanese staff working with the team. Atmosphere-wise, it's going to be a very nice fit for myself. I'm just very, very excited to be a Red Sox right now."

Earlier this offseason the Red Sox signed outfielder Rocco Baldelli and righthanders Brad Penny and John Smoltz to contracts that were also incentive-laden.

The Associated Press contributed to this report.