The left-hander will receive $10 million next season as part of the $36 million, three-year contract agreed to Friday. He will get $13 million in each of the final two seasons.
Happ, who pitched for Toronto from 2012-14, was a 62-61 career record, fills another rotation spot for the AL East champions, who could lose fellow lefties David Price and Mark Buehrle in free agency this offseason. Earlier in November, Toronto re-signed right-hander Marco Estrada to a $26 million, two-year contract.
The 33-year-old Happ was 11-8 with a 3.61 ERA in 31 starts for Seattle and Pittsburgh last season, setting career highs with 172 innings and 151 strikeouts. He was especially effective after getting traded to the Pirates in July, going 7-2 with a 1.85 ERA in 11 starts down the stretch to help them earn an NL wild card.
Happ went 19-20 with a 4.39 ERA in 50 starts and eight relief appearances during 2 1/2 seasons with the Blue Jays.