A former top prospect in the Yankees organization, the 25-year-old Mexican was designated for assignment by the Braves on Aug 12 after being demoted from Triple-A to Double-A.
Banuelos had two strong minor league seasons, then missed 2013 while recovering from Tommy John surgery. He was traded to the Braves on Jan. 1, 2015, made his big league debut on July 2 last year and went 1-4 with a 5.13 ERA in six starts and one relief appearance.
He had surgery to remove a bone spur from his pitching elbow on Sept. 17 and felt more elbow discomfort this spring. He was 0-5 with a 5.33 ERA this year in 14 starts and three minor league levels.
Los Angeles closer Huston Street went on the disabled list Aug. 2 with right knee inflammation and is seeking a second medical opinion that may lead to surgery. Angels manager Mike Scioscia said any surgery likely would be minor and would take place during the off-season.