The agreement avoided an arbitration hearing.
"I think both sides were happy that we didn't end up going down that road and we were able to agree with something beforehand," Fraser said, according to TSN. "I wanted to be back at a fair price, but so did they, so I actually look at that as sort of a compliment."
Fraser, 26, had eight assists, 85 penalty minutes and a team-leading plus-18 rating and 102 blocked shots in 45 games during the 2012-13 season. He had one assist and seven penalty minutes in four Stanley Cup Playoff games.
"I've been back to Toronto a couple of times throughout the summer for checkups," Fraser said. "Probably about a month ago I was cleared to start training, and a couple weeks ago I was cleared to start skating."
Fraser has played 143 NHL games with Toronto and the New Jersey Devils, with three goals, 13 assists, 171 penalty minutes and a plus-20 rating. He was a third-round pick (No. 84) by the Devils in the 2005 NHL Draft.
Last season he often was partnered with Cody Franson, who also is seeking a new contract.
"We felt like we had something really good last year and we wanted to maintain that, and that was the message this morning as well," Fraser said.
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