Frasor, 36, was 4-3 with a 2.57 ERA in 61 games (49 innings) in 2013, his first season with Texas after signing last January. Opponents hit just .203 against Frasor, who held lefties to a .152 average this season.
Frasor said he loved pitching for a contending team for the first time and wanted to come back to the Rangers.
"It made me want to come back a lot," Frasor said. "You wait too long and there are 50 guys out there. Then it's Christmas and New Year's. You never know where you might end up. It's nice to know the World Series isn't over and one of the best teams in baseball wants you back. I'm thrilled."
Frasor improved as the season progressed, sporting a 2.06 ERA in his final 41 innings beginning in June. It was the 13th-lowest ERA in that span among American League relievers. He was eligible for free agency this offseason.
Information from ESPNDallas.com reporter Todd Wills contributed to this report.