Holmes agreed to a five-year deal that averages slightly less than $10 million per season with $24 million guaranteed, a source with knowledge of the situation told NFL Network insider Jason La Canfora on Wednesday.
Holmes was considered the Jets' main priority once the free-agency period started Tuesday after the NFL lockout ended. And the team quickly went to work on making sure it kept one of Sanchez's favorite targets.
Holmes later tweeted a photo of himself drinking from a champagne bottle and said: "Just finish a bottle of Louis Roederer Cristal from 2002! Big bro showed love today."
Holmes, acquired last offseason from the Steelers, had 52 catches for 746 yards and six touchdowns for the Jets last season and re-established himself as the go-to guy he was while in Pittsburgh. After returning from a four-game suspension to start the season, Holmes quickly developed a rapport with Sanchez, who said Tuesday he was willing to restructure his contract if it helped the Jets go after free agents.
While it's unclear if any restructuring by Sanchez or any player was done, the Jets were aggressive in bringing back Holmes. They're also in talks with former Oakland Raiders cornerback Nnamdi Asomugha, regarded as the top overall free agent.
The Jets entered the free-agent period with 16 unrestricted players, including Holmes and offensive lineman Wayne Hunter, who agreed to terms on a four-year deal Tuesday. Keeping Holmes could mean the Jets are moving on from fellow wide receiver Braylon Edwards, who had 53 catches for 904 yards and seven touchdowns last season.
"Congrats to @santonio10 Great player and good friend!" Edwards wrote on his Twitter page.
Edwards has said he wants to remain in New York, but it was believed the Jets would need to choose between him and Holmes.
"It was such a luxury to have both of them last year," Sanchez said. "It's almost unrealistic to have that kind of a receiving corps again. Whichever guys we get back, it's going to be them playing really well, and me getting even better."
Edwards reiterated in a tweet Wednesday that he wants to stay with the Jets, "but the feeling doesn't seem to be mutual with the management." He later deleted the tweet.
Meanwhile, Edwards was in court in Cleveland on Wednesday. A judge spared him jail time but extended his Ohio probation by one year for violating terms by driving drunk in New York.
"All of my court days r behind me, thk God and I am ready to play Football," Edwards wrote on Twitter.
Holmes, 27, was acquired from the Steelers in April 2010 for a fifth-round pick -- an incredibly low price for a former Super Bowl MVP. But Holmes had some off-the-field issues, and the Steelers were finished with him despite the fact he was coming off career highs with 79 catches and 1,248 receiving yards.
There was a lawsuit in Florida from a woman who claimed Holmes threw a glass at her, cutting her above the eye. He was arrested in 2008 for possession of marijuana and involved in a domestic-violence incident in 2006; the misdemeanor charges were later dismissed. He also was accused of telling a fan to "kill urself" on his Twitter page, but he implied that his account was hacked.
After Edwards came to the Jets, a flight attendant claimed he failed to follow regulations as the plane he was aboard landed in Pittsburgh. He also was forced to sit out the first four games of last season for violating the league's substance-abuse policy.
Tannenbaum acknowledged the Jets were taking a risk by acquiring Holmes but insisted it would be worth it. And he was right.
Holmes was a big-time playmaker in the clutch, helping lead New York to its second consecutive AFC championship game. Holmes played key roles in three consecutive wins with big catches late in games, prompting Ryan to call key moments "Tone Time."
The Associated Press contributed to this report.