The shortstop, who turns 40 in June, has been injured for most of the season and had little time on the field, but the Yankees brought him on nevertheless. The move is risky, since there is no way for the team to determine whether he can still make it as a hitter.
Jeter has been on the disabled list four times and missed 145 games.
He had a decent season in 2012 when he was healthy, but at his age, risk of re-injury is high.
His contract for 2014 is a one-year deal for $12 million, which is $2.5 million more than the original deal and $2 million more than the player option he could have picked up, but considerably less than the $17 million he earned in the previous three seasons.
Yankees owner Hal Steinbrenner bumped the final figure as an act of respect for Jeter's allegiance to the team as he finishes out his career, rather than leaving him with $9.5 million offer he might refuse.