A person familiar with the deal confirmed the trade to The Associated Press. The person spoke on condition of anonymity because no one was authorized to discuss the trade that will be completed pending physicals.
As part of the trade, the Yankees also sent 24-year-old pitcher Hector Noesi to Seattle for 19-year-old righty Jose Campos.
The deal addresses needs for both sides. The Yankees were looking for another starter, preferably young, to add to their rotation, while the Mariners were desperate for a slugger to add to an offense that was among the worst historically the last few seasons.
In addition, another person familiar with the agreement told the AP the Yankees had reached a deal with free agent pitcher Hiroki Kuroda on a $10 million contract for one season. The 36-year-old righty was 13-16 with a 3.07 ERA for the Dodgers last season. Kuroda's contract is pending a physical.
After losing in the first round of the playoffs, the Yankees kept looking for pitching this winter after they passed on bidding for the top free agents in what was a weak year for starters.
They could part with the 22-year-old Montero because they have several catchers in their system who are considered far better defensively. They have Austin Romine at Triple-A, plus Russell Martin earned an All-Star appearance in his first year with New York and was praised for his work with the Yankees' pitching staff.
In just 69 plate appearances, Montero hit four homers, drove in 12 runs and batted .328 for New York in a September call-up that earned him a spot on their playoff roster. He showed patience at the plate and an ability to hit with power to the opposite field.
Montero hit .288 with 18 homers and 67 RBIs at Triple-A Scranton/Wilkes-Barre last year. Montero nearly came to Seattle back in 2010 as part of a deal for Cliff Lee that fell apart. Lee was later traded to Texas.
Pineda, who turns 23 later this month, earned his way into the Mariners' rotation with his performance last spring. By the end of the season, he was in place as Seattle's No. 2 starter for the future behind ace Felix Hernandez.
Pineda went 9-10 with a 3.74 ERA in his rookie season that started fast, then endured typical rookie struggles as the season progressed. One of Pineda's high points was starting at home against the Yankees on May 27 when he was already 6-2. Pineda threw five innings that night of a 4-3 Seattle victory.
But Pineda's rookie problems started soon after. Over his final 17 starts, Pineda was 3-8 and his ERA ballooned to 4.74. Overall, he struck out 173 in 171 innings.
Pineda was expendable because of Seattle's rich depth of starters. The Mariners have Hernandez at the top of their rotation and just signed Japanese pitcher Hisashi Iwakuma. Those two, combined with lefty Jason Vargas and young prospects Charlie Furbush and Blake Beavan, will likely make up Seattle rotation to begin the season.
In the minors, three of Seattle's top prospects all project as starting pitchers: right-hander Taijuan Walker, lefty Danny Hultzen — the No. 2 pick in last year's amateur draft — and righty James Paxton.