Signing Iguchi allows rookie second baseman Matt Antonelli time to get more at-bats in the Minor Leagues.
The Padres didn't want to sign a veteran second baseman to anything more than a one-year deal because they feel Antonelli is ready or close to being ready to assume the starting job at the Major League level.
Also, Kosuke Fukudome, the highly regarded Japanese outfielder, won't be playing in San Diego next season.
Fukudome's agent, Joe Urbon, confirmed late Tuesday that the 30-year-old decided not to accept the Padres' offer of a multiyear contract offer.
Fukudome instead agreed to a four-year, $48 million contract with the Chicago Cubs.
It was early Tuesday when Fukudome announced his intention to come to the United States to play in 2008, refusing a multiyear deal from the Tokyo-based Yomiuri Giants and his former team, the Chunichi Dragons.
"I won't be playing for a Japanese club next season, I'll play in the Majors," Fukudome told the Associated Press in Tokyo. "I appreciate the fans who supported me for nine years. I hope that the fans continue to root for me when they see me playing in the United States."
The Padres are believed to have offered Fukudome a three- or four-year deal in excess of $10 million per season.
San Diego CEO Sandy Alderson told the Associated Press last week that the offer was "one of the two or three biggest deals" in franchise history.
The team will now likely turn its attention to free agents Mike Cameron or Geoff Jenkins to fill their outfield needs.
Corey Brock is a reporter for MLB.com. This story was not subject to the approval of Major League Baseball or its clubs.