Gay had indicated earlier via his Instagram account on Tuesday that he had agreed to re-sign with the team.
Both sides entered the week optimistic that a deal would get done. Gay told ESPN early Tuesday, "We both are trying to do the best we can on each side to make it happen."
A few hours later, things became official.
Gay said he improved in 2015 -- as did the Steelers' defense as a whole. But Gay emphasized that the transitional phase with Pittsburgh's secondary needs to be over. The Steelers have rebuilt the defensive backfield over the past two years as they transitioned from coordinator Dick LeBeau to Keith Butler. Pittsburgh increased its turnover and sack totals in 2015 but gave up nearly 300 passing yards per game for much of the season.
"That's over with," Gay said of the transition. "People can't accept that anymore. We will have to be professionals with it. ... I will remind [the players], with the growing pains we went through, we don't need to take a step back."
Gay has redefined his career after being cut by the Arizona Cardinals three years ago. In 2015, he became a Steelers captain and played almost every snap for the defense.
He was the team's most reliable cornerback over 16 games, finishing 2015 with 58 tackles, 1 sack and 2 interceptions, including one for a touchdown in Cincinnati.
The Steelers entered the offseason with re-signing Gay as a priority in free agency, assuming the money was reasonable.
Gay was primarily a slot corner for much of his career but was a steady presence on the outside for Pittsburgh. He turned 31 in January.
When Gay re-signs, he will be the second Steelers player who was scheduled to become an unrestricted free agent on Wednesday to stay with the club. Wide receiver Darrius Heyward-Bey agreed to a three-year deal with Pittsburgh on Monday.