Lynch agreed to a one-year deal that, according to Denver-area media outlets, is significantly less than the $3.12 million in salary and roster bonuses he was due to earn under his existing contract.
He reached the deal after meeting with owner Pat Bowlen and coach Mike Shanahan.
It nearly didn't happen. Lynch had made his decision to leave, even drafting
a letter thanking fans and teammates for his four years in Denver. But when Lynch called Bowlen on Thursday night to inform him of his choice, Bowlen was out for a late dinner.
By the time Bowlen called back, Lynch had fallen asleep.
By Friday, Lynch was having a change of heart. And conversations with Bowlen and Shanahan led the nine-time Pro Bowl safety to change his mind and accept less money for at least one more season in Denver.
"I could probably go make more money elsewhere in the free-agent market," Lynch told Denver-area media. "And I had really gone to bed excited about that.
"And then I woke up thinking, 'What am I doing?' I've got four kids who are happy here. I've found a home here, and I didn't want to be one of those guys going from team to team. I felt I had earned what I had coming to me, but sometimes you have to step back and look at the big picture. And the big picture to me was: I had to find a way to make this work."
Lynch, who will turn 37 next season, had started to come off the field on passing downs last year, but he played every snap in the last three games. In 2007, he missed one game with a groin injury and two more with a neck injury.
He finished last season with 62 tackles and one sack in 13 games.
In 15 seasons with the Broncos and Buccaneers, Lynch has 26 interceptions, 13 sacks and
1,075 tackles. He won a Super Bowl with Tampa Bay in 2002.
Information from The Associated Press was used in this report.