The one-year deal is worth $6.25 million, Yahoo Sports reported.
"We're thrilled to have Steve back with us for another year as we think he's a great fit for our club," Red Sox general manager Dave Dombrowski said. "Obviously, we all saw what kind of impact he can have on the field, especially with the postseason that he had. He also provides good depth and balance from the right side for us."
Pearce, a grinder who has bounced from team to team, was an improbable World Series MVP, hitting .333 with three homers and eight RBIs against the Los Angeles Dodgers. Each of his four hits went for extra bases, and he drew four walks without striking out, posting a .500 on-base percentage.
In Game 4, he launched a tying home run in the eighth inning, then added a three-run double in the ninth that sent Boston to a 9-6 win.
The 35-year-old first baseman had been a valuable role player for the Red Sox after being acquired in a June 28 trade with the Toronto Blue Jays. He batted .279 for Boston, with seven home runs and 26 RBIs in 50 regular-season games.
In early August, with incumbent first baseman Mitch Moreland slumping, Pearce powered Boston to a key four-game sweep of the Yankees by hitting four home runs, three of which came during a statement-making 15-7 rout in the opener.
In the AL Division Series against the New York Yankees, with Moreland nursing a balky hamstring, Pearce started three of four games and hit .333 for the series. In Game 3 of the AL Championship Series against Houston, with the score tied at 2 and the series tied at 1, it was Pearce's sixth-inning homer off Astros reliever Joe Smith that seemed to tip the scales in Boston's favor.
He's a career .257 hitter, with 90 home runs and 294 RBIs in nine seasons.
When Pearce joined the Red Sox -- his ninth team in seven seasons -- it completed a rare sweep. He has played for every club in the American League East.
In 2014 with the Baltimore Orioles, he developed a reputation as one of the game's more underrated utility players, a dangerous right-handed bat who could play almost anywhere on the field. He was signed by the Tampa Bay Rays in 2016, and went to Toronto in 2017.
Pearce came up with the Pittsburgh Pirates, where he played from 2007 to 2011. He was released by the Pirates in 2011, and in March 2012 signed a minor league deal with the Yankees. He was traded to the Orioles in June 2012.
In 2017, Pearce signed a two-year, $12.5 million fully guaranteed contract with the Blue Jays. His adjusted salary with the Red Sox was $1.5 million.