The 29-year-old is a plus defender at shortstop, but he never has been able to produce much with the bat. In 92 games for Triple-A Buffalo this year, Diaz hit .205 with a .615 OPS.
Diaz was originally taken by Toronto in the 12th round of the 2006 First-Year Player Draft. He has spent all but one of his nine professional seasons in the Blue Jays organization.
The signing gives Toronto some additional depth up the middle. Infielder Ryan Goins is the only other shortstop that would have the ability to fill in for Jose Reyes if he went down with an injury.
It was an injury to Reyes that created an opportunity for Diaz in 2014. Reyes went down with a strained hamstring on Opening Day and Diaz had his contract purchased from Buffalo to take over the starting duties. He'll likely be in a similar emergency fill-in type role next year.
Gregor Chisholm is a reporter for MLB.com. Read his blog, North of the Border, and follow him on Twitter @gregorMLB. This story was not subject to the approval of Major League Baseball or its clubs.