The deal is worth close to $34 million for the first three years, and includes $12 million if the Rangers decide to extend it to a fourth, the Dallas Morning News reported.
"It's exciting to have Vicente back in the fold for the next few years," said Rangers General Manager Jon Daniels in a release. "He was a horse for us last year, and demonstrated he can pitch and win in our park."
Padilla, a native of Nicaragua, was 15-10 with a 4.50 ERA, 70 walks and 156 strikeouts in 200 innings last season.
He has a career mark of 66-61 in eight big league seasons, with an ERA of 4.06, and also has pitched for Philadelphia and Arizona.
Last season was his first with the Rangers.