The deal avoids arbitration and gives Arrieta the highest one-year deal for a pitcher with four years of major league service.
Arrieta, who turns 30 in March, had a breakout season last year, helping the Cubs to the National League wild card. He won the NL Cy Young Award after going 22-6 with a 1.77 ERA, easily cruising past most of his previous career highs.
He was rewarded with a $7.07 million raise.
The settlement was $450,000 above the midpoint of the arbitration numbers exchanged by the sides Jan. 15. Arrieta asked for $13 million, and the team had offered $7.5 million.
Arrieta and the Cubs had the largest gap among players who swapped figures with their clubs, but president of baseball operations Theo Epstein said last month he was confident the sides would reach an agreement before a hearing.
"I think, you know, in this case, if you focus on the spread, you're kind of missing the story, which is that I think it provides a lot of room for further discussion," Epstein said at the team's winter convention.
The Cubs' July 2013 trade for Arrieta was a key moment in their move from the bottom of the NL Central to 97 wins last season and a spot in the NL Championship Series, where they were swept by the New York Mets.
Chicago traded pitcher Scott Feldman and catcher Steve Clevenger to Baltimore for Arrieta and reliever Pedro Strop. Arrieta went 10-5 with a 2.53 ERA in his first full season with the Cubs and was dominant for much of last year.
Arrieta, who made $3.63 million in 2015, is 56-38 with a 3.70 ERA in 136 career games.