The team announced the deal Wednesday. Lowrie asked for $1.5 million in arbitration, while the Astros offered $900,000. His hearing had been scheduled for Friday.
Lowrie, a switch-hitter who was eligible for arbitration for the first time, batted .252 with six homers and 36 RBIs in 88 games for the Red Sox last season. He played every infield position and made $450,000. He is expected to become Houston's starting shortstop this year.
The Astros do not have any players remaining in arbitration.
Lowrie can earn an additional $75,000 in performance bonuses: $25,000 each for 341, 502 and 550 plate appearances. He had 341 plate appearances last year.