General manager Ken Holland announced the contract Tuesday.
Helm, a 25-year-old center, had nine goals and 17 assists in 68 games last season. He had surgery on a tendon in his right arm after he was hurt in Game 1 of a first-round playoff series against Nashville. The Red Wings lost in five games.
Helm was drafted in the fifth round by Detroit in 2005. He had a career-high 12 goals and 32 points in 2010-11.
He has 16 points in 65 career postseason games.