The deal is worth $925,000 per year, a source told ESPN.com's Pierre LeBrun.
The 31-year-old Orr had a goal and three assists in 44 regular-season games this season and led the NHL in penalty minutes with 155. He played in all seven of Toronto's playoff games, putting up 18 penalty minutes.
The Leafs also signed goalie Drew MacIntyre to a one-year, two-way contract. The 29-year-old McIntyre was 13-5-3 with a 1.83 goals-against average for the Toronto Marlies in the American Hockey League this season.
Information from ESPN.com's Pierre LeBrun and The Associated Press was used in this report.