Sutton finished with two goals, 14 assists and 162 blocked shots in 55 games with Atlanta last season. The 6-foot-6 defenceman ranked fourth in the NHL with 195 blocked shots during the 2005-06 season.
"He's a big guy who plays big and isn't afraid to do the dirty work," Islanders coach Ted Nolan said in a statement. "He fills a big void for us and our fans are going to love to watch him in an Islanders uniform because he's a competitor and hard worker."
The 32-year-old Sutton has 27 goals and 78 assists in 432 games with Atlanta, Minnesota and San Jose.