According to Mike Klis of the Denver Post, the contract is a four-year deal valued at $43 million.
Bailey, who turns 33 in June, took a pay cut to stay. He will make a guaranteed $11 million this season, or $2 million less than the $13 million he made in 2010.
Bailey will now be a member of the Denver Broncos and will help new head coach John Fox revamp a defense that has proved extremely porous the last few seasons. He should receive help from All-Star defensive end Elvis Dumervil, who should return at full strength after missing last season with a torn pectoral.
Bailey is a 10-time Pro Bowl selection, has 48 career interceptions, and is on track to be a first ballot Hall of Fame selection once his career is over, a career that should now continue in Denver.