Terms of the deal were not disclosed but initial reports have the deal for five years and worth $90 million.
Eligible for free agency following his record-breaking season, Bonds found few suitors able to meet his financial demands. In a stunning move, he accepted arbitration just hours before the deadline and the Giants were only obligated to sign him to a one-year deal.
At $18 million per season, Bonds would tie Chicago's Sammy Sosa as the highest-paid player in the National League and would put him in the top five highest-paid players in the game.
Bonds is coming off a season in which he set the single-season record with 73 home runs. He also had the highest slugging percentage (.863) and most walks (177) in a single year and also led the league in on-base percentage (.515) and extra-base hits (107).
The 37-year-old Bonds captured an unprecedented fourth Most Valuable Player Award in November, winning in near-unanimous fashion. He previously won the award in 1993 with San Francisco and in 1992 and 1990 with the Pittsburgh Pirates.
With the retirement of Mark McGwire, Bonds has assumed the role as the game's top active slugger with 567 home runs. A five-year deal almost would guarantee that Bonds could make his run at Hank Aaron's all-time home run record of 755 in a Giants' uniform.