The last-place team announced the decision before Friday's game against the Chicago Cubs.
Price and the Reds agreed to a one-year contract with a team option. The entire coaching staff also has been offered contracts for 2017.
The Reds entered Friday's game at 67-92, 34½ games out of first in the NL Central. This year's team set a franchise record by using 32 pitchers and a major league record by allowing 253 home runs. The Reds went 32-57 before the All-Star break before improving to 35-35 in the second half.
Price was promoted from pitching coach to manager after the 2013 season and saddled with a rebuilding effort. His overall record is 207-276.