With a few hours left before Wednesday's midnight ET deadline, Ortiz's representatives informed the Red Sox that the slugger had accepted the club's offer of arbitration.
"We're happy about it," said general manager Ben Cherington. "[We'll have] one of the best hitters in the American League back on the team, so it's a good outcome. And we wanted him back one way or another, and this was one way to do it. We're happy about it and look forward to having him in the lineup again."
Though the acceptance of arbitration guarantees Ortiz will return to the Red Sox for one more season, the designated hitter still has hope of getting a multiyear deal before the process ends in January.
In arbitration, Ortiz would get a raise from the $12.5 million salary he earned in 2011, perhaps making as much as $14 million to $15 million. The Red Sox had offered him a two-year, $18 million deal.
Ortiz has long stated a goal of finishing his career with the Red Sox, and Cherington said the club could share that desire at the right cost.
"There will be a lot more talks, because we have to go through the arbitration process, and what the outcome of those are, I don't know," said Cherington. "I think this sort of focuses the conversation, at least a little bit, because we have to sort of both work in under the framework of the arbitration system. He'll be back on the team."
The decision by Ortiz to remain with the Red Sox came hours after he was named the Edgar Martinez Outstanding Designated Hitter for the sixth time in his career, and first since 2007.
"Well, when you have someone who wins an individual award and honor the previous season, you're always excited about him being on the team, and last year David -- I guess it's just been announced, he's the DH of the year, and how could I not be excited about having the DH of the year as a DH?" Red Sox manager Bobby Valentine said.
While Ortiz recovered from slow starts in 2009 and '10 to put up solid numbers, he was a force throughout last season, hitting .309 with 40 doubles, 29 homers, 96 RBIs and a .554 slugging percentage.
His .953 OPS was fourth in the American League.
Ortiz, 36, has been one of the best sluggers in Red Sox history.
He has belted 20-plus homers in nine straight seasons for Boston, trailing only Ted Williams (16 seasons), Dwight Evans and Jim Rice (11 times each) for the team record.
But in October, Ortiz has made an even bigger mark, serving as a driving force in the team's World Series championships of 2004 and '07.