The deal announced Friday also includes a club option for 2018 and replaces his second and third years of arbitration eligibility. Financial terms weren't disclosed.
The 29-year-old made the most of his first opportunity to play regularly last season. He played well defensively at second base and posted career highs in several offensive categories, including a team-leading .281 batting average.
Forsythe appeared in 126 games at second base, starting 123. He also filled in at first base, third base and designated hitter, starting 25 of 42 games in which he played those positions.
Forsythe ranked second on the team behind third baseman Evan Longoria with 17 home runs, 68 RBI, 152 hits, 33 doubles, 52 extra-base hits and 153 games played.