The people spoke on condition of anonymity Tuesday because the deals had not been announced.
The base salaries are $12 million for Papelbon and $2.4 million for Ellsbury. They were Boston's only arbitration-eligible players. Theo Epstein kept intact his record of never going to arbitration with a player since becoming general manager in 2002.
Comcast SportsNet New England first reported the agreements.
Papelbon is coming off his worst season with a 5-7 record, 3.90 ERA and 37 saves in 45 opportunities. He made the AL All-Star team in four of his five seasons as Boston's closer and has a career record of 19-18 with a 2.22 ERA and 188 saves. He becomes eligible for free agency after the 2011 season.
The Red Sox signed free agent Bobby Jenks, the former closer for the Chicago White Sox who is expected to fill a setup role at least in the coming season.
Papelbon, a 30-year-old righty, received the highest one-year contract for an arbitration-eligible pitcher and the fourth-highest overall. Prince Fielder and the Milwaukee Brewers avoided salary arbitration Tuesday by agreeing to a $15.5 million, one-year contract. The previous highest-single season contract for an arbitration-eligible player was Mark Teixeira's $12.5 million agreement with Atlanta in 2008. Carlos Zambrano got $12.4 from the Chicago Cubs.
Papelbon avoided an arbitration hearing for the third straight year. He and the Red Sox agreed to one-year contracts of $6.25 million for 2009 and $9.35 million for 2010.
The 27-year-old Ellsbury would receive an additional $50,000 for 600 plate appearances and another $50,000 for 700. His salary last season was $496,500.
He had just 78 official at-bats last year when fractured ribs limited him to 18 games. He hit .192 with no homers, five RBIs and seven stolen bases. In 2009, he batted .301 in 624 at bats with eight homers and career-highs of 60 RBIs and 70 stolen bases. For his career, he is hitting .291 with 20 homers, 130 RBIs and 136 stolen bases in 349 games.
AP Sports Writer Ronald Blum contributed to this report.