Teahen played in a career-best 149 games last season, hitting .255 with 31 doubles, 15 home runs and 59 RBIs. Teahen plays all three outfield positions, and first and third base.
The 27-year-old is a career .268 hitter with 47 home runs and 243 RBIs in 532 games.
Teahen earned $2,337,500 last year and asked for $3.85 million in arbitration when he exchanged proposed salaries with the Royals last month. The team offered $2.75 million.
Kansas City has one player remaining in arbitration: first baseman Mike Jacobs.