The Boston Globe reported late Thursday that the hard-throwing, 27-year-old right-hander received a one-year deal worth $775,000.
In 2007, his second year in the major leagues, he went 1-3 with a 1.85 ERA.
The 6-foot-4, 230-pounder recorded 37 saves in 40 chances.
In 81 1/3 innings, Paplebon walked only 15 batters while striking out 84.
He sought $900,000 after he received about $425,550 last season.
"We're chugging away at this thing and we want to get it done, believe me," Papelbon said earlier this week about his contract demands. "We can move on, but at the same time, I feel a certain obligation, not only to myself and my family to make the money that I deserve, but for the game of baseball."
Fellow closer Mariano Rivera of the New York Yankees makes an estimated $15 million annually.