A .303 career hitter, Polanco played for Philadelphia from 2002 to 2005 before being traded to the Tigers for relief pitcher Ugueth Urbina and infielder Ramon Martinez.
"We're very happy to have Placido back in a Phillies uniform," general manager Ruben Amaro Jr. told Major League Baseball website mlb.com.
"He's a professional hitter who will enhance our lineup. As a Gold Glove infielder, we're very confident that he will make a smooth transition back to third base. Polly also gives us some added versatility at second base if and when Chase (Utley) needs a rest."
Polanco hit .285 with 10 home runs and 72 RBIs in 618 at-bats last season with Detroit.
The Dominican has played 322 games in his career at third base, but only nine since the end of the 2004 season.
(Writing by Larry Fine in New York, Editing by Clare Fallon ; To query or comment on this story firstname.lastname@example.org)