Hunter began last season as Baltimore's closer, but the right-hander faltered and was replaced by Zach Britton. Hunter regrouped and played a key role as a late-inning specialist for the AL East champions.
Hunter went 3-2 with 11 saves in 17 tries in 2014. He had a 2.97 ERA over 60 2-3 innings, striking out 45 and walking only 12.
Hunter avoids arbitration with the contract, which was announced on Monday.
Hunter is 42-31 with a 4.32 ERA over 226 career games.