Cleary will earn $1.75 million with the Red Wings this season.
"It's been a long process," Red Wings GM Ken Holland said on the team's website. "We talked to Dan in July, just before free agency and we couldn't find a solution. Ultimately we made some decisions. I know Dan had some opportunities this week and he made a decision to come Detroit on a one-year contract."
The 15-year NHL veteran registered nine goals and six assists for 15 points, along with 40 penalty minutes, in 48 games with the Wings last season.
Cleary has played in 869 career NHL regular-season games with the Chicago Blackhawks, Edmonton Oilers, Phoenix Coyotes and Red Wings, and has accumulated 160 goals and 217 assists for 377 points, along with 455 penalty minutes.
He was originally drafted 13th overall by Chicago in the 1997 NHL Entry Draft.