Gore's contract with Indianapolis also includes $8.5 million in guaranteed money, the source said.
Gore's deal with Indianapolis marks the end of an eventful week for the 31-year-old running back, who intended to sign with Philadelphia over the weekend before reportedly reversing his decision Monday.
Gore is coming off four straight 1,000-yard rushing seasons and has rushed for over 1,000 yards in eight of the past nine seasons. The only season over the past nine in which he failed to reach that threshold was 2010, when he missed five games with a broken hip. Gore is considered an excellent pass protector as well.
A five-time Pro Bowler, Gore was a big proponent of Jim Harbaugh returning to the Niners, who instead "mutually" parted ways with the coach and promoted defensive line coach Jim Tomsula to the head-coach position. Gore said he wanted to see what the 49ers did with the job before deciding his own future.
ESPN's Adam Schefter contributed to this report.