Mets general manager Omar Minaya said that Alou is expected to serve as New York's left fielder in 2007, meaning that Cliff Floyd's stay in Flushing has likely ended, as well as putting the future of prospect Lastings Milledge in question.
Alou batted .301 (104-345) with 22 home runs and 74 RBI in 98 games for the San Francisco Giants in 2006, a year marred by injuries to Alou's ankle and back.
He will earn $7.5 million in 2007, with a team option set for the same amount in 2008 – alternately, the Mets can buy out Alou for $1 million.
"I felt like this was the team that had the better chance to win and to go to the World Series," Alou told reporters on a conference call. "The length of my contract doesn't really matter now at this point in my career because I have the confidence that I'm going to have a good year. And if I have another good year, this is going to be a two-year deal.
"I wasn't worried about making sure I was going to get two years. I wanted to come here because I wanted to win this year. I wanted to be on a good team. If things work out the way I think they're going to work out, it's probably going to be a two-year stay in New York."
With Alou in the fold, Milledge may be part of a deal to garner more help to a starting rotation that officially cut left-hander Tom Glavine loose as a free agent on Monday, declining a $14 million option on the 40-year-old veteran.
The Mets still hope to re-sign Glavine on the open market, perhaps steering him away from the Atlanta Braves, but will now move forward on other fronts as well.
Vargas, 23, is the more major league-ready of the pair, having made five starts for the Marlins in 2006 and compiling a 1-1 record and 5.70 ERA. He also appeared in 17 games for the Marlins in 2005 and should get a chance to make the Mets out of spring training.