The left-hander agreed Monday to a new contract that adds $16.5 million over three seasons through 2015.
Cincinnati's setup man already was guaranteed $3.1 million this season as part of a two-year contract. The deal announced Monday adds salaries of $4.5 million in 2013, $5.5 million in 2014 and $6.5 million in 2015.
"We made the trade for him with the idea to extend him," general manager Walt Jocketty said. "He's a quality person. I think he'll add a lot to our franchise for three years -- actually, we have him for four years now. If you look at the quality of his work, he's one of the top setup guys in the game. And we have the flexibility if we want to use him in a few years as the closer."
That would be fine with Marshall, who is coming off his best season. The 29-year-old went 6-6 with a 2.26 ERA in 78 games with a career-high five saves. He was a starter when he began his six-year career with the Cubs, who turned him into a setup man.
"As a reliever, the premier job is to be the closing pitcher," he said after a spring training workout Monday. "If the opportunity arises and I'm handed the ball in the ninth inning ... I think I'm more than capable of it."
Marshall feels comfortable with the Reds and was hoping they'd offer a new deal rather than allowing him to become a free agent after the season. His agreement includes a limited no-trade provision.
"We picked a few cities where we didn't think we'd want to live," he said. "There are a couple teams on the list, but hopefully we'll just pitch well here and we won't have to worry about that."
Under the new deal, Marshall can earn an additional $1 million annually in performance bonuses based on starts and $1 million a year based on games finished. The games finished bonuses will be added to the starts bonuses already in his 2012 deal.
One of the Reds' offseason priorities was to improve their late-inning pitching. Closer Francisco Cordero left as a free agent after four seasons in Cincinnati, and there was no one on the staff with significant closing experience in the majors.
Madson was Brad Lidge's setup man for three years in Philadelphia before moving into the closer's role last season. He converted 32 of 34 save chances, and the Phillies were negotiating a contract extension before they decided to sign Jonathan Papelbon to a $50 million, four-year deal.
Madson went looking for a closer's job and found one with Cincinnati, which offered a one-year contract for $8.5 million. There's a mutual option for 2013 at $11 million, with a $2.5 million buyout.
The Reds won the NL Central in 2010 and were swept by the Phillies in the opening round of the playoffs. They took a step back last season, when pitching was a problem, and responded by overhauling the bullpen and adding Mat Latos to the rotation.
"I came here for the opportunity to close on a team that is going to be in the playoffs, I believe," Madson said on Monday. "It's a great hitting team that is going to score a lot of runs. With the addition of Marshall and a couple of other guys, it's going to be a good team."
Madson knew only a couple of the Reds when he joined them. They're getting see firsthand every day what he can do.
"Remember, he's new to closing," manager Dusty Baker said. "The guys were telling me how they hit him and how they approached him -- usually not with much success."