Gagne joins a bullpen that lost closer Francisco Cordero, who agreed to a four-year, $46 million contract with the Cincinnati Reds. Derrick Turnbow and Gagne are the top candidates to close for the Brewers.
"Eric's saves numbers speak for themselves," Milwaukee general manager Doug Melvin said. "This signing provides a proven closer who will be an integral part of our rebuilt bullpen."
Gagne was a disappointment in Boston, which acquired him from Texas in July. He was 2-2 with a 6.75 ERA in 20 games for the Red Sox, finishing 4-2 with 16 saves and a 3.81 ERA overall.
He had 152 saves with the Los Angeles Dodgers from 2002 to 2004, the most in a three-year period in major league history. Gagne won the NL Cy Young Award in 2003 with a career-high 55 saves and a 1.20 ERA.
He had a season-ending operation on his right elbow in June 2005 and appeared in two games for the Dodgers the next year.
Nationals -- The team agreed to a one-year contract with catcher Paul Lo Duca, according to media reports. Terms were not released. Lo Duca hit .272 with nine home runs and 54 RBIs for the Mets this past season.
Jose Guillen -- The players association filed a grievance to overturn the 15-day suspension given to Royals outfielder Jose Guillen for violating baseball's drug program. Guillen and the Orioles' Jay Gibbons were suspended Thursday after media reports that they received human growth hormone after January 2005, when it was banned by baseball. Gibbons did not contest his penalty. On the day he was suspended, Guillen finalized a three-year, $36 million contract with the Royals. He batted .290 with 23 homers, 99 RBIs and 28 doubles for the Mariners this past season.