Counsell will be paid $1.4 million in 2011, according to multiple reports.
The 40-year-old Counsell has played each of his past four seasons in Milwaukee. Last year, he hit .250 with two homers and 21 RBIs in 102 games.
Counsell's deal includes $450,000 in performance bonuses based on games and games started. He may have an expanded opportunity for playing time after the Brewers sent starting shortstop Alcides Escobar to Kansas City as part of a six-player deal for Zack Greinke.
"I think it's pretty easy to say, going into spring training, this is the best team the Brewers have had since I've been here," Counsell told the Milwaukee Journal Sentinel, commenting on the team's acquisitions of Greinke and Shaun Marcum.
"It's definitely exciting. They've made a big commitment," he said. "It's a great time to be a Brewer."
Milwaukee also claimed right-hander Roque Mercedes off waivers from the Diamondbacks on Tuesday, a little more than a year after trading him to Arizona.
The 24-year-old Mercedes went 3-4 with a 4.36 ERA in 38 relief appearances last season at Arizona's Double-A Mobile farm team after being traded in July 2009, along with outfielder Cole Gillespie, for Felipe Lopez.
Mercedes spent his first 4½ years in the Brewers organization, never advancing beyond Double-A.
Information from The Associated Press was used in this report.