Sources told ESPN that the team agreed to pay Finley the bonus as part of his $8.25 million total compensation package for 2013, rather than release him.
Finley expressed his excitement at remaining with the Packers in a tweet Monday afternoon.
"Ecstatic 2 b back w @packers. Best place on earth. Thank u 2 my agents & family," he wrote.
Finley had told ESPN last month that he would be unlikely to accept a pay cut to stay with the team.
Finley had a bit of a disappointing season in 2012, catching 61 passes for 667 yards and two touchdowns. His agent also made waves last season when he questioned quarterback Aaron Rodgers' leadership qualities.
Finley, who turned 26 on Tuesday, told the Milwaukee Journal Sentinel that he learned from last year's up-and-down season. The approach he had in the second half of the season is the one he knows he'll need to have in the future.
"It's all about letting my play speak," he said. "It's all about letting my ability do its job. That's what I'm going to do this year and I guarantee I'll be relaxed and be the player I know I can be."
He has 137 receptions for 1,735 yards and 11 TDs in three seasons.
Despite his high price tag, Finley's youth and potential convinced the Packers he was worth keeping. Green Bay also couldn't afford to let another big piece of their offense go, having already lost top receiver Greg Jennings to rival Minnesota and tight end Tom Crabtree to Tampa Bay.
"I love the expectations that I have to meet this year," Finley said. "I have to make it happen."
Information from ESPN NFL Insiders Adam Schefter and Ed Werder and The Associated Press was used in this report.