The person spoke on condition of anonymity Wednesday because there was no official announcement.
The 31-year-old McLouth revived his career with the Orioles last season. An NL All-Star in 2008, McLouth was cut by Pittsburgh in late May after hitting just .140 with two RBIs in 34 games.
Baltimore signed McLouth to a minor league deal in early June and promoted him to the majors two months later. He hit .268 with seven home runs and 18 RBIs, and helped spark the Orioles to an AL wild-card spot.
McLouth made $1.75 million last season. His new contract provides performance bonuses of $50,000 each for 300 and 350 plate appearances, and $100,000 each for 400, 450, 500 and 550 plate appearances.