The team announced Sheahan signed the deal Thursday.
Sheahan had 14 goals and 25 points in a career-high 81 games last season. The 24-year-old Sheahan has 36 goals and 85 points in his career, which began toward the end of the 2011-12 season. Detroit drafted him in the first round out of Notre Dame in 2010.
Detroit also signed defenseman Brian Lashoff to a two-way contract. He will make $650,000 if he plays in the NHL and $275,000 if he is in the AHL again with the Grand Rapids Griffins. The 24-year-old Lashoff played for the Griffins all of last season after playing in 117 games for the Red Wings the previous three years.