Pyatt will make $800,000 in 2010-11 and $1.2 million in 2011-12, a source told ESPN.com's Pierre LeBrun.
Pyatt had 12 goals and 11 assists in 74 regular-season games for Phoenix, plus one goal and one assist in seven playoff games.
The 28-year-old Pyatt signed with the Coyotes as a free agent last Sept. 2 after previously playing for Buffalo, Vancouver and the New York Islanders. He was a first-round pick of the Islanders in 1999 and has 103 goals, 111 assists and 354 penalty minutes in 606 career NHL games.
ESPN.com's Pierre LeBrun and The Associated Press contributed to this report.