Fossum set career highs for wins, innings pitched and strikeouts last season when he went 8-12 with a 4.92 ERA in 36 games, including 25 starts. He moved from the bullpen into the rotation in mid-May and struck out 128 in 162 2/3 innings.
Fossum's deal includes a $50,000 signing bonus and calls for base salaries of $2 million in 2006 and $2.2 million in 2007.
He could earn an additional $800,000 in performance bonuses in 2007 and again in 2008, when he would earn $3 million in base pay or receive a $300,000 buyout if the Devil Rays don't exercise their option.
The 28-year-old left-hander is 26-38 with a 5.17 ERA in parts of five major league seasons with Boston, Arizona and Tampa Bay.