Nugent, 30, set Bengals single-season records for points (132) and field goals (33) last season. His base salary last year was $685,000.
"We're happy Mike has signed in advance of our offseason camps," coach Marvin Lewis said in a statement. "This does not preclude our continuing to talk to Mike and his representatives about reaching a longer-term deal. Mike has been a fine performer for us."
The NFL deadline for teams to reach a long-term deal with their franchise players is July 15. If no deal is reached at that point, Nugent would play the entire season under the tag.
Nugent had one of his best seasons in the NFL last year, finishing eighth in field-goal accuracy (86.8 percent) and kicking two game-winning field goals late in the fourth quarter (Week 4 vs. Buffalo and Week 12 vs. Cleveland).
He was voted as the team's Ed Block Courage award winner after coming back from a severe knee injury that sidelined him for the final seven games in 2010.