Sherman noted the deal features $1 million in incentives.
Jon Heyman of MLB Network first reported the deal.
The 34-year-old is an 11-year veteran who has spent nearly his entire career with the Cleveland Indians, including last season.
During the COVID-shortened 2020 season, Santana appeared in all 60 games, hitting just .199 with eight home runs, 30 RBI and 34 runs scored. Although his power production was down, he led the American League with 47 walks and posted a .349 on-base percentage.
His penchant for getting on base has always been one of his greatest strengths, but he did more than that in 2019, which was a career year for him.
His .281 batting average was a career best, as were his 34 home runs, 93 RBI and 110 runs scored. He also had 108 walks, plus a .397 on-base percentage and .515 slugging percentage. As a result of his production, he was named an All-Star and won a Silver Slugger award for the first time in his career.
Santana broke into the big leagues as a catcher with the Indians in 2010, but he eventually transitioned to first base. He played in Cleveland for his first eight seasons before signing with the Philadelphia Phillies in free agency in 2018.
He lasted just one year in Philly before getting traded back to Cleveland, though, which turned out to be a positive move for his career.
While Santana is getting up there in age and coming off a down season, his ability to draw walks and get on base gives him a high floor in terms of being an effective player.
Even when he isn't hitting homers and driving runs in with regularity like he did in 2019, he is a useful player since he finds a way to keep the line moving.
If Santana can continue to do that, he has a chance to be one of the biggest steals of free agency for the Royals.
Kansas City is coming off a 26-34 season and hasn't reached the playoffs since winning the World Series in 2015, but with Santana joining a talented lineup that also includes Jorge Soler, Whit Merrifield, Salvador Perez and Adalberto Mondesi, KC could be a tough team to play against in 2021.