Grier, who could have become an unrestricted free agent on July 1, reached the deal -- worth $1.4 million -- with the Sabres on Monday.
The gritty forward scored 10 goals and had 22 points in 73 games for Buffalo this past season. He also had a pair of goals in the Sabres' six-game loss to Boston in the first round of the playoffs.
Grier has 367 points in 987 career NHL games.
Information from ESPN.com's Pierre LeBrun and The Associated Press was used in this report.