The contract, which will pay Varitek $5 million in 2009, is technically considered a one-year deal, but it includes a dual option for '10.
The Red Sox will have the first right to exercise the option at $5 million. If they decline, Varitek can have it kick in at $3 million, with the opportunity to get another $2 million in performance bonuses.
To make room for Varitek on Boston's 40-man roster, first baseman/outfielder Jeff Bailey was outrighted to Triple-A Pawtucket.
Varitek isn't expected to discuss his new deal until next week, when pitchers and catchers report to Fort Myers, Fla., on Thursday.
"With Jason, it worked out in the end," general manager Theo Epstein said in an interview with WEEI earlier this week. "I think he and the Red Sox have a contract that accomplished a lot of the goals on both sides, mainly for him, it makes it much more likely that he'll be a Red Sox not only in 2009 but in 2010 as well. So for the Red Sox, we got a player who, as I said at the beginning of the offseason, we said he was an important part of what we do, and we got him at an affordable price, so I think both sides are happy."
It has been a stressful offseason for Varitek, who declined Boston's offer of arbitration on Dec. 7 and then waited nearly two months before sealing his fate.
Coming off a rough season offensively (.220, 13 homers, 43 RBIs), Varitek can now focus on rebounding instead of worrying about where he's going to play.
Through his offensive struggles, Varitek still managed to make the American League All-Star team last season. The fact that he was voted in by his peers despite such subpar statistics demonstrated the respect he has earned throughout the game for his catching ability and work ethic.
"To me, he's the backbone of the team," Red Sox reliever Manny Delcarmen said of Varitek last week. "Throughout this whole thing, I thought it would be kind of weird not having him in the clubhouse and not having him there to yell at me for not pitching inside. I'm sure a lot of guys feel the same way. Everyone is happy that it's over."
"He's a guy that I think everybody relies on," 2008 AL MVP Dustin Pedroia said. "He's a guy where, if you have a problem with anything, you go to 'Tek and he helps you out with anything. He's so smart. He's got so much baseball knowledge. He's a winning player. That's the only way to describe 'Tek. He does everything he can to help this ballclub win. That's why he's one of the best catchers in the business."
Varitek, who turns 37 on April 11, has played in 1,330 games in his career, compiling a .263 average with 161 homers and 654 RBIs. He was a Gold Glove winner in 2005 and has been an All-Star three times.
Varitek has caught more games (1,274) than any player in Red Sox history and will now have a chance to add to that number for at least one more year.
Ian Browne is a reporter for MLB.com. This story was not subject to the approval of Major League Baseball or its clubs.