"I can afford to pay for my wedding," he said.
Gibbons, who has spent his entire five-year major league career with the Orioles, would have become eligible for free agency after the season. He had asked for $5.3 million in arbitration, and the Orioles had offered $4 million.
The contract for the 28-year-old calls for salaries of $4.2 million this year, $5 million in 2007, $5.7 million in 2008 and $6.2 million in 2009. The agreement followed a season in which he batted .277 with 26 home runs and 79 RBI in 139 games.
He didn't think about testing his market value as a free agent.
"It never really crossed my mind," he said, adding that he was happy he and his fiancée now "have some place we can call home and be part of the community."
Gibbons has a .261 career average with 102 homers. He was drafted by Toronto in 1998 and played three minor league seasons in the Blue Jays farm system before being selected by the Orioles in the 2000 winter meeting draft.
As a rookie in 2001, he hit 15 home runs in 73 games, then missed the final two months of the season with a broken bone in his right hand.
After hitting a career-high 28 homers in 2002, Gibbons had his best season in 2003, batting .277 with 23 homers and 100 RBI in 160 games.
Back and hip injuries limited him to 97 games in 2004.
Gibbons is only the third Oriole to hit 100 or more home runs in his first five major league seasons, joining Eddie Murray (133) and Cal Ripken (108). He ranks 18th on the Orioles' career home run list.