The team announced the deal on Wednesday.
Tampa Bay acquired Callahan from the New York Rangers March 5 along with a pair of draft picks for Martin St. Louis, who helped his new team reach the Stanley Cup finals. The Lightning lost to Montreal in the opening round of the postseason.
Lightning general manager Steve Yzerman says Callahan is a ''fierce competitor and outstanding leader who fits very well with our team.''
''I am excited for this new chapter of my career,'' Callahan said. ''Tampa Bay has been a great place to live and play from the day I got there. As soon as the season ended I knew it was a place I wanted to be.''
Callahan, who has played in 470 games with the Lightning and Rangers, has 138 goals and 127 assists. In 20 games with the Lightning last season, Callahan had six goals and 11 points.
Also, the Lightning used their second and final compliance buyout on forward Ryan Malone.
Acquired from Pittsburgh in June 2008, Malone had 92 goals and 201 points in 342 games with the Lightning. Slowed by injuries, he had five goals and 15 points in 57 games last season.
Malone was charged with DUI and possession of cocaine two months ago after a traffic stop in Tampa.