Martinez will earn $6.75 million this upcoming season and $11.75 million in 2017. The 28-year-old outfielder can become a free agent after the 2017 World Series.
When the sides exchanged proposed arbitration salaries last month, Martinez had asked for a raise from $3 million to $8 million for this season and had been offered $6 million.
He batted .282 with 38 home runs and 102 RBIs last season. He hit 23 homers in 2014 after he was released by Houston during spring training, and the Tigers signed him.
Martinez is part of what projects to be a formidable batting order for the Tigers, who signed free-agent outfielder Justin Upton last month in an effort to extend their window of opportunity to win a World Series. Miguel Cabrera remains one of the game's top hitters, and Detroit is hoping Victor Martinez can rebound from a disappointing 2015.
Detroit finished in the AL Central cellar last season after winning the previous four division titles.
Sanchez has a $16 million team option for 2018, and Upton can opt out of his new six-year deal after 2017.
J.D. Martinez's rise has been one of the most pleasant surprises for the Tigers over the past two years. He showed decent power in three years with the Astros but struggled to get on base consistently. Detroit was able to acquire him on a minor league contract in March 2014, and since being called up to the majors early that season, he's been a force with the bat.