Varvaro, 26, pitched four innings in four games with the Mariners in September as a late-season callup, going 0-1 with an 11.25 ERA.
Olivo brings a much-needed veteran presence behind the plate as a nine-year Major League veteran with 866 games under his belt. He's expected to take over the majority of the Mariners' catching duties while working with Adam Moore, who caught 60 games but hit just .195 last year as a rookie.
Olivo threw out 33 runners in 2010 for the Rockies, second in the National League in both the number of baserunners caught and percentage (42.3). He was also second in the American League in caught-stealing percentage in '08 with the Royals at 42.4.
The 6-foot, 230-pounder also should help the Mariners' offense after hitting .254 with an average of 16 home runs and 56 RBIs over the past five seasons with the Marlins, Royals and Rockies.
He's one of two free agents signed by the Mariners this offseason to help bolster their lineup, along with designated hitter Jack Cust. The team also has added infielder Brendan Ryan through a trade with St. Louis.
Olivo brings a career .246 average with 110 home runs and 388 RBIs, having started his career in '02 with the White Sox before being traded to the Mariners in '04 and then the Padres in '05.
Olivo struggled in his first stint with Seattle, hitting .176 with 11 home runs and 32 RBIs in 104 games after being obtained along with Jeremy Reed and Mike Morse in exchange for Freddy Garcia and Ben Davis.
But the native of the Dominican Republic has played a lot of baseball since then, and the Mariners believe they're getting a veteran right-hander who can both handle their young pitching staff and add some punch to a position that struggled last year.
The Mariners used five catchers in '10, with Moore, Rob Johnson, Josh Bard, Guillermo Quiroz and Eliezer Alfonzo all splitting time. That group combined to hit just .201 with 10 home runs and 42 RBIs, posting the lowest on-base percentage (.263), slugging percentage (.303) and OPS (.566) in the AL.
Johnson was traded to the Padres on Dec. 21 for a player to be named later. Bard, Quiroz and Alfonzo are all unsigned free agents.
Olivo and Moore are now targeted as the Mariners' primary catching duo, with former Cleveland Indians backup Chris Gimenez signed to a Minor League contract three weeks ago with an invitation to Spring Training.