Cabrera got a deal that pays him a $1.25 million signing bonus and $770,000 salary this year. The agreement includes a $4 million mutual option for 2011. If Cabrera declines it, he gets a $500,000 buyout. If he accepts it and the team declines, he receives a $1 million buyout.
Several teams were interested in Cabrera as a second baseman, making the Reds a more attractive destination because he could play his natural position.
"A little bit," Cabrera said. "But I think the challenge of the Reds is better for me."
The 35-year-old shortstop played for Oakland and Minnesota last season, batting a combined .284 with 36 doubles, nine homers and 77 RBIs in 160 games. Cincinnati expects to bat him second, with 25-year-old Drew Stubbs in line to bat leadoff now that Taveras is gone.
"I'm going to do everything I can, even if I have to change my name to one Ocho," Cabrera said, referring to Bengals receiver Chad Ochocinco.
Information from The Associated Press was used in this report.