Sandoval's five-year deal is worth $95 million and includes a sixth-year club option worth $17 million, with a $5 million buyout, a source told ESPNBoston.com's Gordon Edes.
Sandoval was introduced Tuesday at a news conference at Fenway Park, where the switch-hitting third baseman was joined by Red Sox general manager Ben Cherington and president/CEO Larry Lucchino.
"Pablo was a primary target of ours to start the offseason," Cherington said. "He really embodies a lot of what we care about."
The Red Sox also are expected to hold a news conference later Tuesday to unveil free-agent acquisition Hanley Ramirez, who agreed to a deal with Boston on Monday, a source confirmed to Edes.
The moves give the Red Sox a potent batting order that includes two of the past three World Series MVPs, Sandoval and David Ortiz.
"I'm going to enjoy this ballpark," Sandoval said. "It was one of the things I was thinking about in my decision."
"It was a tough decision for me," Sandoval said. "The Giants gave me the opportunity to be in the big leagues."
Ramirez and the Red Sox agreed to a four-year, $88 million deal with a fifth-year vesting option worth an additional $22 million, a source told Edes.
Ramirez, who will turn 31 on Dec. 23, has primarily played shortstop throughout his 10-year career but has also told teams he would be willing to change positions. There is no question as to what position Sandoval will play; he has played almost exclusively at third base since his first full season in the majors in 2009.
Sandoval has starred in the postseason, hitting .344 with six homers and 20 RBIs in 39 games. He became the first player in baseball history to homer in his first three at-bats in a World Series game, accomplishing the feat in Game 1 of the 2012 Fall Classic against the Detroit Tigers.
"This guy has been a big winner," Cherington said. "He's been a performer when it counts the most."
Sandoval, 28, is a career .294 hitter who had 16 homers and 73 RBIs in the regular season this past season. With his everyman body type and colorful nickname -- Kung Fu Panda -- he was a fan favorite in the Bay Area.
"He has been with us through some of the greatest moments in San Francisco Giants history -- including all three World Series championships," the Giants said Monday in a statement. "We will never forget his World Series MVP performance in 2012 and his numerous contributions to the 2014 championship. His connection with Giants fans -- young and old -- is truly special, and he will be greatly missed. We wish him nothing but the best in Boston."
Ramirez came up in the Red Sox system and was still a prospect when he was traded to the Florida Marlins in the deal that brought Josh Beckett and future World Series MVP Mike Lowell to Boston. He batted .300 with 13 homers and 71 RBIs for the Los Angeles Dodgers this past season.
ESPNBoston.com's Gordon Edes and The Associated Press contributed to this report.