The two sides have reached agreement on a multi-year deal, according to a source. It will become official once Chen passes the physical.
Chen, 26, was 8-10 with a 2.68 ERA in 25 games (24 starts) this year for the Chunichi Dragons of the Nippon Professional Baseball League.
The 6-foot southpaw has a low-90s fastball that reportedly tops out at 96 mph. He also throws a slider and changeup, and is working on a forkball. He logged 164 2/3 innings this year despite receiving treatment for a leg injury.
Chen pitched for the Chinese Taipei national team in the 2004 and 2008 Olympics. He's 36-30 with a 2.59 ERA, 547 hits allowed, 159 walks and 520 strikeouts in five seasons and 650 2/3 innings. He won the ERA title (1.54) with the Dragons in 2009.
The addition of Chen further crowds a rotation that figures to include Jeremy Guthrie, Tommy Hunter, Jake Arrieta and Zach Britton, unless executive vice president Dan Duquette has another deal in the works.
Japanese left-hander Tsuyoshi Wada, who signed a two-year, $8.15 million deal with a 2014 option worth $5 million, could be pushed to the bullpen. The same goes for Brad Bergesen and Dana Eveland. Brian Matusz and Chris Tillman could be pushed to Triple-A Norfolk.
Bergesen and Eveland are out of options and would have to clear waivers before being assigned to the Tides.
FOX Sports' Ken Rosenthal first reported that the Orioles were close to a deal for Chen.
UPDATE: Chen will receive a three-year deal from the Orioles. Various reports place its overall value between $11-$12 million.