The 39-year-old, who will make $6.5 million in each of the next two seasons, was obtained in a trade with Seattle on July 23, revived his career and quickly became a fan favorite.
His batting average jumped from .261 with the Mariners to .322 with the Yankees, with five homers, 27 RBIs and 14 steals.
"The Yankees are the kind of team that I always envisioned being a part of," Suzuki said in a statement released by the team. "Everyone in the world of competition has a strong desire to win, but the Yankees also have an atmosphere where losing is not an option. These two observations may sound similar, but I believe it is a rarity to find both coexisting in the same organization."
A 10-time Gold Glove outfielder with speed and a strong arm, Suzuki has 2,606 hits in 12 major league seasons. He figures to see corner outfield time, with the Yankees allowing right Nick Swisher to become a free agent.
"I believe the Yankees organization appreciates that there is a difference between a 39-year-old who has played relying only on talent, and a 39-year-old who has prepared, practiced, and thought thoroughly through many experiences for their craft. I am very thankful, and I will do my best to deliver on their expectations," he said.
New York opened a roster spot by designating right-hander Jim Miller for assignment. Suzuki raises the Yankees' payroll next year to $182 million for 13 players with agreements.