The Broncos did not disclose terms of the deal for the 11-time Pro Bowl quarterback but a report on the National Football League's website said it was for five years and $96 million.
"Peyton is one of the best ever to play this game and I feel very fortunate to have him here," Broncos owner Pat Bowlen told reporters at a news conference. "Our goal has always been to win Super Bowls and Peyton gives us a chance to win another world championship."
News of the deal comes two weeks after Manning, who missed the entire 2011 NFL season after multiple neck surgeries, was cut by the Indianapolis Colts, where he won a Super Bowl and broke all of the franchise's major career passing records.
"I'm very excited to begin the next chapter in my playing career with the Denver Broncos," said Manning.
"This organization is committed to winning. This truly is a special football environment ... in the end I thought the Broncos were just a great fit."
Manning will wear No. 18 on his jersey, just as he did in Indianapolis, after getting the blessing of Frank Tripucka, the Bronco's initial quarterback whose jersey number had been retired by Denver.