The team and Madson have agreed to a three-year, $12 million extension, pending a physical.
The deal calls for Madson to receive a $1 million signing bonus, $2 million this season, $4.5 million in 2010 and $4.5 million in 2011. He can earn $1.5 million annually in performance bonuses if he becomes a closer: $150,000 each for 30, 35, 40 and 45 games finished; $200,000 each for 50 and 55, and $250,000 each for 60 and 65.
"Ryan has emerged as a quality setup reliever and big game pitcher," general manager Ruben Amaro Jr. said in a statement. "We're very happy that he will be part of our bullpen for at least another three years."
The deal buys out Madson's final year of arbitration and two free-agent years. The agreement was first reported Monday by The Philadelphia Inquirer.
Late in the year, Madson became the Phillies' most trusted set-up man for Brad Lidge.
In Madson's final 25 appearances, from Aug. 31 through the end of the postseason, he had a 1.33 ERA, allowing only four earned runs in 27 innings, with a strikeout-to-walk ratio of 30-to-2.
The deal is unusual because Madson is a Scott Boras client. And Boras clients rarely sign extensions that give away their free-agent years.
But Madson has spent his whole career in the Phillies' organization, lives in the Philadelphia area year-round and pushed for a contract that would keep him in Philadelphia beyond this season.
There were a slew of signings on Monday. Among them:
Sanchez was 5-1 with a 4.32 ERA in 66 relief appearances in 2008, when he made $950,000. He was part of a Mets bullpen that blew 29 of 72 save chances and he faded down the stretch, compiling an 8.64 ERA from Aug. 15 while allowing eight runs and 13 hits in 8 1/3 innings and letting opposing hitters bat .342.
Sanchez had surgery on his right shoulder in April 2007.
Reed, obtained from Seattle during the winter meetings along with reliever J.J. Putz in a three-team, 12-player trade, hit .269 for Seattle last year with two homers and 31 RBIs in 286 at-bats.
Four Mets remained in arbitration and were set to exchange proposed figures with the team on Tuesday: right-hander John Maine, outfielder Ryan Church, reliever Pedro Feliciano and outfielder Angel Pagan.
The 30-year-old Wellemeyer went 13-9 with a 3.71 ERA last year in his first season as a full-time starter.
Duncan, 27, batted .248 with six home runs and 27 RBIs in a season shortened by cervical disk replacement surgery in August. He can made an additional $500,000 in performance bonuses.
"It makes sense to get those things settled," manager Tony La Russa said. "Less distractions for spring training, so good news."
Cantu gets $3.5 million, and Hermida's deal is for $2.25 million. Neither agreement was publicly confirmed by the Marlins.
Cantu, who made $600,000 last year, had a comeback season, hitting .277 with 29 home runs and 95 RBIs.
Hermida batted .249 for the Marlins in 2008 with 17 home runs and 61 RBIs. He made $395,000 last season.
The Braves avoided arbitration with closer Mike Gonzalez, agreeing Monday to a $3.45 million, one-year contract.
Gonzalez was successful in 14 of 16 save chances last year after returning June 18 from elbow ligament-replacement surgery. He was 0-3 with a 4.28 ERA.
Closer Kevin Gregg and the Cubs agreed Monday to a $4.2 million, one-year contract that avoided salary arbitration.
The Cubs acquired the 30-year-old right-hander from the Florida Marlins last November for right-hander Jose Ceda, then said the following day that they wouldn't attempt to re-sign Kerry Wood, who then agreed to a $20.5 million, two-year deal with Cleveland.
Gregg was 7-8 with 29 saves and a 3.41 ERA in 72 appearances last season for the Florida Marlins. He made a team-high $2.5 million.
The 29-year-old hit .226 with two home runs and 12 RBIs for the Astros last tear, when he set career highs foir games, at-bats, runs, hits, doubles and RBIs.
Left-hander Jimmy Gobble agreed Monday to a $1.35 million, one-year contract with the Royals, a slight raise from the $1,312,500 he earned last year.
Gobble was 0-2 with an 8.81 ERA and one save in 39 relief appearances for Kansas City last season. After giving up 10 runs in one inning against Detroit on July 21, he went on the disabled list until Sept. 2 because of a stiff lower back. When he returned, he didn't allow a run in his final eight appearances and seven innings.
He can earn an additional $50,000 in performance bonuses: $25,000 each for 55 and 70 games.
The Blue Jays and reliever Brandon League agreed Monday to $640,000, one-year contract.
The 25-year-old right-hander was 1-2 with one save and 2.18 ERA in 31 relief appearances last season, allowing 28 hits in 33 innings.
Repko hit .167 in limited duty for the Dodgers last season, getting three hits in 18 at-bats. He can also earn an additional $87,500 based on plate appearances: $12,500 for 100, and $25,000 each for 150, 250 and 350.
Napoli hit .273 with 20 homers and 49 RBIs for the Angels last season.
Relief pitcher Frank Francisco has agreed to a $1.6 million, one-year contract with the Rangers.
Francisco went 3-5 with five saves and a 3.13 ERA last season in 58 appearances. He took over as the Rangers' closer on Aug. 25 and didn't allow an earned run in his final 11 appearances of the season, going for 5-for-5 in save chances.
The Reds and outfielder Jonny Gomes agreed to a minor league contract Monday with an invitation to spring training.
Gomes played the first four months of last season with AL champion Tampa Bay before being optioned to Triple-A Durham. He was recalled on Sept. 13 and finished the year batting .182 with eight homers and 21 RBIs.
Information from ESPN.com senior baseball writer Jayson Stark and The Associated Press was used in this report.