The team announced Friday it agreed to a deal with the eight-year veteran.
Powell has been on the free-agent market since the end of last season. The 30-year-old appeared in just seven games for the Jets in 2018 because of a neck injury that landed him on injured reserve.
Former head coach Todd Bowles told reporters last October that Powell's injury was so severe it could be career-ending.
Brian Costello of the New York Post reported early Friday that Powell was going to have a workout with the team.
It must have gone well, since Powell will get a chance to be part of a running back group that already includes Le'Veon Bell and Ty Montgomery.
Powell has been a steady presence as a backup for the Jets throughout his career. He has averaged at least four yards per carry in each of the past seven seasons and finished second on the team with 343 rushing yards last year.