Bethea, 25, signed the deal hours after the Colts wrapped up their final minicamp practice this spring and just days before Indy could have reduced the $2.521 million one-year tender that had been on the table since March.
"I think both sides handled it well," Bethea told the team's official website on Friday. It's a big burden off my shoulders. It feels real good. ...I'm just thankful for the Colts organization and Mr. Irsay for both sides reaching an agreement and getting it done. Today is a great day for me and my family."
The two-time Pro Bowler was a restricted free agent who has not participated in voluntary offseason workouts, in part to avoid injury while negotiations were quietly taking place.
"You always want to be out there on the field with your comrades, with your friends, your teammates, and just hearing about (OTAs) was tough," Bethea said.
"Like I've said before, to draft me in the sixth round, and I won't say take a chance on me, but giving me that opportunity to come in and prove myself, it was just something for me. They believed in me. They believed in the talent that they saw. For me to start and end here would be a great deal for me."
In four seasons, he has 351 tackles and 11 interceptions.
The Associated Press contributed to this report