The deal is for two years and $11 million guaranteed and includes a third-year, $8 million option that will vest if Sanchez reaches a designated threshold of 635 plate appearances in 2009.
Sanchez will get a $300,000 signing bonus, $4 million this year and
$6.1 million in 2009. The contract potentially locks up Sanchez with the Pirates through his first year of free agency in 2010.
"Freddy is an important part of this organization and we are excited to have him under contract for his last two arbitration years and his first year of free agency," Pirates general manager Neal Huntington said in a statement. "This contract is an illustration of our willingness to commit to our quality young players who are positive representatives of the Pirates both on and off the field."
Sanchez, 30, is a .310 hitter in parts of six major league seasons with Boston and Pittsburgh. He won the National League batting title with a .344 average in 2006, and hit .304 in 147 games for the Pirates last season.
By signing the new deal, Sanchez avoids a salary arbitration hearing scheduled for next week. Sanchez had been looking for $4.9 million in arbitration, while the Pirates had countered with an offer of $4.1 million.
Sanchez is the first Pirates infielder to hit .300 in
consecutive seasons since third baseman Bill Madlock in 1982-83,
based on a minimum of 450 plate appearances. Sanchez was a third
baseman when he won the batting title in 2006.
Jerry Crasnick covers Major League Baseball for ESPN.com. Information from The Associated Press was used in this report.