The agreement is for $28 million over the next four years, with a $2 million buyout in 2012 and 2013, which would bring him to exactly $30 million. The option for 2012 is for $13 million and the option for 2013 is believed to be for about $15 million.
Cano had recently requested $4.55 million through arbitration, with the Yankees submitting a $3.2 million figure.
Cano took over as the starting second baseman in 2005 and was an All-Star in 2006. He got off to a slow start in 2007, but rebounded to finish at .306 with 19 home runs and 97 RBIs. He then was one of New York's few productive offensive players in the Division Series loss to Cleveland, batting .333 with two home runs.
New York has two other players still eligible for arbitration. Starting pitcher Chien-Ming Wang asked for $4.6 million and was offered $4 million; and reliever Brian Bruney requested $845,000 while New York countered at $640,000.
New York also was nearing completion of a minor league contract with backup infielder Chris Woodward. If added to the major league roster, he would get a one-year deal for $700,000 while in the majors and $120,000 while in the minors.
Woodward hit .199 in 136 at-bats for the Atlanta Braves last year. The nine-year big league veteran could earn an additional $200,000 in performance bonuses, getting the full amount for 325 plate appearances.