The reigning National League champions held a $6 million option on the 35-year-old infielder, who joined the team in August after a trade from the Pittsburgh Pirates. The team did not exercise the option, and Freese instead received a $500,000 buyout as well as a new $4.5 million contract, according to ESPN and multiple reports.
Freese was 8-for-20 with two home runs, six RBIs and a walk in 14 postseason games while platooning at first base. With Chase Utley having just retired, Freese will fill a veteran leadership role in the clubhouse for a Dodgers team that has come up short in two straight World Series appearances.
Freese can fill in at third base and first base and the Dodgers value his bat against lefties.
The Dodgers remain in ongoing negotiations with ace Clayton Kershaw. According to president of baseball operations Andrew Friedman, the talks with Kershaw's camp are "ongoingly pleasant.''
The three-time NL Cy Young Award winner and the team agreed to extend the deadline on Kershaw's opt-out decision by 40 hours until 4 p.m. ET Friday.
ESPN's Alden Gonzalez contributed to this report.