He follows Saracens' capture of Bath and England lock Steve Borthwick, who recently signed a four-year deal.
Owen, Wales captain during the latter stages of their 2005 RBS 6 Nations Grand Slam campaign, joins Saracens from Magners League side Newport Gwent Dragons.
Owen also toured New Zealand with the 2005 British and Irish Lions, and he joins fellow international Dwayne Peel in moving out of Wales after the Llanelli Scarlets scrum-half recently agreed terms with Sale Sharks.
Although currently out of favour in Test terms, Owen could prove a valuable recruit for Heineken Cup quarter-finalists Saracens, given his ability to play in the second-row or back-row.
Owen said: "When the opportunity came up, I met with the club and I was very excited about the future for Saracens and I wanted to be part of it.
"I am really looking forward to the fresh challenge and the chance to compete in the Guinness Premiership and in Europe.
"I've also still got strong international ambitions for Wales, and I am sure that being part of the success at Saracens will help with that.
"It is a big decision to leave the Dragons and move my family, but it is one which feels right."
Saracens rugby director Alan Gaffney added: "Michael is a very hard-working player who has high skill levels, and he will fit in well with the style we want to play at the club.
"He is also in the prime of his career, and his arrival next season will really strengthen the squad."