Each MLB club is permitted to reserve no more than 40 players on its MLB Reserve List, which is why the MLB Reserve List is also called the "40-man roster."
Each MLB club is permitted to roster a maximum of 25 players on its MLB Active List (also known as the "25-man roster") Opening Day through August 31st, and the limit is increased to a maximum of 40 players September 1st through the last game of the MLB regular season. The Active List maximum limit then reverts back to 25 players again for post-season play (LDS, LCS, and World Series).
Beginning on MLB Opening Day up through August 31st, a club can temporarily add (recall or select) a 26th player to its MLB Active List on any day where two games are scheduled, as long as the second game was scheduled at least 48 hours in advance. The "26th man" must be on the club's MLB Reserve List (40-man roster) or has to be added to the club's 40-man roster that day. The "26th man" does not have to be a pitcher. The 26-man Active List limit is in effect for both games of the doubleheader, but the "26th man" cannot be switched between games. The club's MLB Active List limit goes back to 25 players the next day.
A player can be added to a club's Active List as the "26th man" even if he has not spent the minimum required 10 days on optional or outright assignment prior to being added. A player recalled as a "26th man" accrues one day of MLB Service Time.
A club can recall a player from a minor league Optional Assignment and place the player on its "Taxi Squad" for one day. If the player is not added to his club's MLB Active List by 3 PM EDT the next day or at least three hours prior to the scheduled start of the next day's game (whichever is later), the player must be removed from the Taxi Squad and returned to his minor league assignment. A player on the Taxi Squad does not count against his club's MLB Active List, and the player does not accrue MLB Service Time while on the Taxi Squad. The most common reason to recall a player and place him on the Taxi Squad is when a club is considering whether to place a player on the Disabled List but has not yet decided.
Each MLB club is required to roster a minimum of 24 players on its MLB Active List during the MLB regular season (and post-season), but in the event of an unusual or unavoidable circumstance (such as a multi-player trade or multiple trades made at about the same time where several players have been acquired but have not yet arrived), a club's MLB Active List can temporarily go below 24 players, but for no more than 48 hours.
NOTE: Even though an MLB club could play with a 24-man MLB Active Roster for an entire season (and save about $500K in payroll by doing so), in practice and by convention no MLB club would do that unless all clubs did.
No more than 16 players on a club's MLB Reserve List (40-man roster) may be on Optional Assignment at any one time.
Only players on an MLB Reserve List (40-man roster) can be placed on an MLB Active List (25-man roster).
A free-agent with prior MLB and/or minor league service who signs a Major League contract must be added to his club's MLB Reserve List (40-man roster) when he is added to an MLB Active List or when the contract is filed with the MLB Commissioner (whichever comes first). Contracts must be filed with the MLB Commissioner within 20 days of signing.
A club must add a player to its MLB Reserve List immediately if the player is acquired as the result of a waiver claim, or if a player on another club's 40-man roster is acquired in a trade, or if a player is selected in the Major League Phase of the Rule 5 Draft.
In addition, an MLB club generally has the option to add any player who is on the reserve list of one of its minor league affiliates to its MLB Reserve List (40-man roster) at any time. The exceptions are:
1. A minor league player eligible for selection in the Rule 5 Draft cannot be added to an MLB 40-man roster during the period of time beginning with the filing of MLB and minor league reserve lists on November 20th (or November 19th if November 20th falls on a Saturday, or November 18th if November 20th falls on a Sunday) up through the conclusion of the Rule 5 Draft.
2. A minor league player who was sent outright to the minors cannot be added back to his club's MLB 40-man roster until he has spent at least 10 days on outright assignment, unless the player is selected to be the "26th man" on a day where a doubleheader was scheduled at least 48 hours in advance, or is selected to replace a player on the 25-man roster who is placed on the Disabled List, Bereavement List, Paternity List, Restricted List, Military List, Disqualified List, or Ineligible List, or if the player's minor league season is over, or if the player is traded.
3. A minor league player eligible for selection in the Rule 5 Draft who was sent outright to the minors anytime after the previous Rule 5 Draft cannot be added back to his club's MLB 40-man roster during the period of time beginning at 5 PM (EDT) on the 5th day following the conclusion of the World Series up through the conclusion of the Rule 5 Draft.
4. An unsigned minor league player who is eligible to be a Rule 55 minor league free-agent (player was previously released in his career and/or player has spent all or part of at least seven separate seasons on a minor league active list or disabled list) cannot be unilaterally added (by selection) to his club's MLB 40-man roster any later than 5 PM (EDT) on the 5th day following the conclusion of the World Series.
5. A player on an MLB Reserve List (40-man roster) who is given his Outright Release during the period of time extending from September 1st through March 31st cannot be added back to the MLB 40-man roster of the club that released the player until May 15th, and a player on an MLB 40-man roster who is given his Outright Release during the period of time extending from April 1st through August 31st cannot be added back to the MLB Active List of the club that released the player for at least 30 days.
6. A player who has not previously signed an MLB or minor league contract can be "Signed for Future Service" (contract is for the following season) if the player signs a Major League contract after July 1st. A player who is "Signed for Future Service" by an MLB club must be placed on the club's MLB Reserve List (40-man roster), and cannot play in MLB or in the minor leagues until Opening Day of the following season. (Attendance at a post-season Instructional League and/or participation in Instructional League games do not count). A player on an MLB 40-man roster who is "Signed for Future Service" cannot be optioned to the minors until he receives a 15-day trial in Spring Training.
NOTE: Beginning in 2012, players signed after being selected in the MLB Rule 4 Draft, players signed as Non-Drafted Free-Agents (NDFA) after being eligible for selection in the MLB Rule 4 Draft, and international players subject to the International Signing Bonus Pool rule, cannot be signed to a Major League contract.
After the conclusion of the MLB season, only those players on a club's MLB Reserve List (40-man roster) who have contracts for the following season are considered "signed players," but the other players on the 40-man roster are still under club control (they are "reserved").
Unsigned players on an MLB club's Reserve List (40-man roster) would include any player who was added to an MLB Reserve List (40-man roster) after the conclusion of the MLB regular season, any player who can have his contract unilaterally renewed by his club, any player who is eligible for salary arbitration, and any player eligible to be an MLB free-agent per Article XX-B of the CBA.
Generally, an MLB club can trade a player on its MLB Reserve List (40-man roster) and minor league reserve lists at any time. However, there are a few restrictions:
1. A player who was signed after being selected in the First-Year Player Draft (MLB Rule 4 Draft) cannot be traded any earlier than the first anniversary of signing his first contract with an MLB organization.
2. A minor league player eligible for selection in the Rule 5 Draft cannot be traded during the period of time beginning with the filing of MLB and minor league reserve lists on November 20th (or November 19th if November 20th falls on a Saturday or November 18th if November 20th falls on a Sunday) and the completion of the Rule 5 Draft.
3. A player on an MLB Reserve List (40-man roster) who has accrued at least ten years of MLB Service Time with at least the last five years of MLB Service Time accrued with the same club has an automatic "no trade" right for as long as he remains with that club. The player can waive this right if he so chooses.
4. An MLB Article XX free-agent who signs a Major League contract after the close of the five-day exclusive negotiation period that follows the conclusion of the World Series has an automatic "no trade" right through June 15th. The player can waive this right, but if he does he can be traded only for cash and/or player contracts with a maximum aggregate value of $50,000.
5. If a "Player to Be Named Later" (PTBNL) is part of a trade, the PTBNL cannot be on an MLB 25-man roster (MLB Active List) at any time starting when the trade is executed up until the PTBNL is announced. Clubs have six months to agree on a PTBNL. A cash payment (typically $50,000 for trades involving players on the 40-man roster) can be substituted for a PTBNL if no agreement can be reached within six months.
6. Beginning at 4 PM (Eastern) on July 31st and extending through the conclusion of the MLB regular season, Trade Assignment Waivers must be secured before a player on an MLB 40-man roster (or 60-day DL) can be traded.