Four-time All Star Darvish notched a 10-12 record and a 3.86 earned run average (ERA) in a combined 31 starts for the Texas Rangers and Los Angeles Dodgers last season, helping the latter reach the World Series, knocking out the Cubs in the process.
Media reports say that the deal for Darvish is worth around $126 million.
"I'm honored to be part of such a wonderful organization," Darvish told a news conference on Tuesday.
"My priority in selecting a team was (one) that has a great chance of winning the World Series, and the Cubs obviously have more than a great chance.
"I can't wait to begin."
Despite a formidable showing in the regular season and playoffs, Darvish failed to live up to expectations in the World Series against the Houston Astros, losing twice in two starts, including the Game Seven decider.
Darvish's recruitment will be a big boost for the Cubs, who are eager to return to the World Series after ending their long drought in 2016, as he joins a strong rotation consisting of Jon Lester, Kyle Hendricks, Jose Quintana and Tyler Chatwood.
"He is probably the preeminent strikeout pitcher of our generation (and has) incredible physical abilities...," Cubs president Theo Epstein said.
"We're getting him at a wonderful point in his career, where he has really matured and is ready to go out and do some special things. We think this is going to be a tremendous fit."
Darvish left Japanese baseball to join the Rangers in 2012, before moving to the Dodgers last July.
(Reporting by Aditi Prakash in Bengaluru; Editing by John O'Brien)