Terms of the deal weren't announced.
Hughes, 26, co-led the Yankees in wins with a 16-13 mark last season over 32 starts, compiling a 4.23 ERA.
The six-year veteran has spent his entire career with New York after being drafted 23rd overall by the team in 2004.
The right-hander sports a 52-36 record with a 4.39 ERA in 152 career games (including 103 starts).
2014: The Year in Music [PHOTOS]