The 26-year-old went 13-6 with a 4.45 ERA in 28 starts for the Twins last season.
Slowey missed some time last year because of injuries and was inconsistent on the mound in his third full season with the Twins. He will enter spring training competing with Brian Duensing and Nick Blackburn for the final two spots in the starting rotation behind Francisco Liriano, Carl Pavano and Scott Baker.
The agreement leaves the Twins with two arbitration-eligible players on their roster to negotiate with -- Liriano and left fielder Delmon Young. Both are in line for big raises after impressive performances in 2010.