The moves protect the two players from the Rule 5 draft, which will be held on the final day of the Winter Meetings, on Dec. 6.
Davis, 26, went 8-3 with five saves and a 2.71 ERA in 48 appearances between Double-A Harrisburg and Triple-A Syracuse in 2012.
He was acquired from the Padres in the Alberto Gonzalez trade in March 2011. Davis is also 3-0 with a 0.56 ERA and a .155 batting average against in 14 appearances this offseason with Gigantes del Cibao in the Dominican Winter League.
Karns, 24, was named the organization's 2012 minor league Pitcher of the Year after going 11-4 with two saves and a 2.17 ERA in 24 games (18 starts) during the 2012 campaign. He started the season at low-A Hagerstown and finished at high-A Potomac.
Karns was the Nationals' 12th-round pick in the 2009 draft. He is 14-6 with two saves, a 2.21 ERA and 10.9 strikeouts per 9.0 innings during two professional campaigns.
Among the players the Nationals did not protect are infielder Jeff Kobernus, left-hander Danny Rosenbaum, outfielder Destin Hood and reliever Rob Wort.
Those players are all candidates to be selected during the Rule 5 draft.
With the additions of Davis and Karns, the Nationals' 40-man roster now has 38 players.