Yzerman, who made $8.5 million in 2002-03, met with Detroit General Manager Ken Holland last week, and the sides agreed to structure a one-year contract before the center can become a free agent on July 1.
The longest-serving captain in NHL history at 18 years, Yzerman missed all but 16 games this season after undergoing surgery last August to repair the right knee he injured during Detroit's run to its 10th Stanley Cup in 2002.
He had two goals and eight points while collecting an assist in the Red Wings' stunning four-game loss to Anaheim in the Western Conference quarterfinals.
Yzerman, who turns 38 on May 9, has 660 goals and 1,010 assists in 1,378 career games. The nine-time All-Star was awarded the Conn Smythe Trophy in 1998 as the playoff's Most Valuable Player and captured the Lester B. Pearson Award in 1989 and the Selke Trophy in 2000.