Blake, 39, was scheduled to become a free agent when the period opened at midnight Wednesday. The deal is worth $3.5 million in base salary, plus bonuses.
Blake is returning to a team that was a playoff disappointment, exiting early for the fourth straight postseason, despite finishing with the best regular-season record.
"For me, it's the same challenge as last year," Blake said in a phone call with ESPN.com. "You look at that team, our regular-season success was good, our playoff failure was terrible. But you also understand that you have an opportunity there. That was intriguing to me to be able to come back. I'm glad it was able to work out for both sides."
Blake is hungry to help the team get over the hump.
"It's almost unfinished business kind of thing," Blake said. "And I think one needs to have that kind of approach; you're only going to be able to be together as a group for a few years, and when you have that much talent you have to make the most of it. We've got some big, big strides to take there."
Blake had 45 points and a plus-15 rating in 73 games with the Sharks last season, when he earned $5 million.
Blake has 747 points (233 goals, 514 assists) in 1,200 career regular-season games in 18 NHL seasons.
Pierre LeBrun covers the NHL for ESPN.com.