The deal was announced Thursday on the eve of the Rays' season opener against the Baltimore Orioles.
The 25-year-old went 12-10 with a 4.07 ERA as a rookie last year. The first four years of the contract are guaranteed, ensuring Davis will earn at least $12.6 million.
The club holds options for the 2015, 2016 and 2017 seasons. The deal covers the right-hander's final arbitration year and first two years of free agency.
Davis is scheduled to make his first start of the season against the Orioles on Sunday.
Under the new deal, Davis gets $1 million this year, $1.5 million in 2012, $2.8 million in 2013 and $4.8 million in 2014. The Rays hold a $7 million option for 2015 with a $2.5 million buyout.
If the first option is exercised, the Rays get an $8 million option for 2016 with a $500,000 buyout. If the second option is exercised, they get a $10 million option for 2017 with a $250,000 buyout.
He had agreed in February to a contract calling for a salary of $434,100 in the major leagues this year.
Howell missed all of last season while recovering from left shoulder surgery. He's expected to be ready to return sometime in May.
Cruz, who was 0-0 with a 3.38 ERA in five appearances with the Kansas City Royals last season, joins a bullpen that's been rebuilt after losing seven of the Rays' top eight relievers from 2010.
Information from The Associated Press was used in this report.