Gausman had asked for $6,225,000 and the Orioles had submitted $5.3 million when proposed salaries were swapped last month, making the settlement $162,500 below the midpoint. He earned $3.45 million last year in his first of four arbitration-eligible seasons.
His deal includes bonuses of $50,000 each for 25, 30, 33 starts; $50,000 if he makes the All-Star team; and $50,000 if he earns a Gold Glove.
Gausman's hearing had been scheduled for Wednesday. With the agreement announced Tuesday, Baltimore avoided arbitration with all seven arbitration-eligible players.
Gausman went 11-12 with a 4.68 ERA last season, making a career-high 34 starts with a personal-best 179 strikeouts. The right-hander was 3-7 on June 21 before rebounding.
The 27-year-old is 34-43 with a 4.18 ERA in five major league seasons, all with the Orioles.
Gausman and Dylan Bundy are the only two clear starters in Baltimore's rotation.
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