Tanaka, 25, was the prize of the free agent pitching market after his Japanese team, the Rakuten Golden Eagles, reluctantly decided to post their ace last month.
The right-hander was an unbelievable 24-0 with a 1.27 ERA last season as he won the Eiji Sawamura Award -- the Japanese equivalent of the Cy Young Award. He also won the MVP of the Japan Series in 2013 as Rakuten won the Japanese championship. He threw 130 pitches in Game 6 and then came back and pitched in relief the next day, closing out the win with a save.
The Yankees' $155 million deal would be the highest ever bestowed upon a Japanese pitcher. Yu Darvish was signed by the Rangers to a six-year, &65 million deal in 2012 and Daisuke Matsuzaka was signed by the Red Sox in 2007 to a six-year, $52 million deal.
Tanaka does, however, have an opt out in his deal after the fourth season.
But what the Yankees didn't have to contend with in paying Tanaka was the old posting system. MLB and the Japanese league agreed to a new posting system this offseason in which an MLB team only has to pay $20 million and are then able to negotiate with the player.
The old system involved a blind bidding process in which the highest bidder only was able to negotiate a contract. The Red Sox bid $51 million just to negotiate with Matsuzaka.
The Yankees had publicly stated they wanted to keep the 2014 payroll under the $189 million luxury tax number. But the team still went out and signed big-name free agents catcher Brian McCann, outfielder Jacoby Ellsbury and Tanaka. They appear likely to save on paying Alex Rodriguez's $25 million salary due to his suspension, however.
Tanaka likely slots into the middle of the rotation, even though scouts believe he does have the stuff to be a top-of-the-rotation starter in the majors. The Yankees' rotation now includes CC Sabathia, fellow Japanese pitcher Hiroki Kuroda and Ivan Nova. The final spot will be a battle in spring between Michael Pineda, who is returning from shoulder surgery, and David Phelps. Adam Warren and Vidal Nuno could also be darkhorse contenders for the final spot.
Tanaka does have a history of pitching on a big stage, with two appearances in the World Baseball Classic. He pitched in four games in relief as a 20-year-old in the 2009 WBC, with a 3.86 ERA in 2 1/3 innings. He was very impressive four years later in last year's Classic. He had a 2.57 ERA and 12 strikeouts and no walks in seven innings.
He has a career record of 99-35 with a 2.30 ERA and 1.11 WHIP in seven seasons with Rakuten. He won the Sawamura Award twice (2011, 2013) and led the league in ERA twice.
Follow Metro New York Sports Editor Mark Osborne on Twitter@MetroNYSports.