Rice's contract expired after a season in which he amassed an NFL-best 2,068 yards from scrimmage and helped the Ravens advance to the AFC championship game.
As a franchise running back, Rice will earn $7.7 million in 2012. Baltimore, however, intends to have him around a lot longer.
"As we have in the past, placing the franchise designation on a player allows us to keep negotiating on a long-term contract," general manager Ozzie Newsome said Friday. "Our goal is to keep Ray Rice a Raven. "
Soon after Baltimore's loss to New England in the AFC title game, Rice said, "I'm not going to complain about the franchise tag, but I prefer the long-term. That's what Baltimore, the city, the fans, would love to know - that Ray Rice is going to be here, not just one year, but for many years to come."
Rice scored a franchise-record 15 touchdowns in 2011 to go with a career-best 1,364 yards rushing. He also led Baltimore with 76 catches (for 704 yards).
In other moves, the Ravens terminated the contracts of wide receiver Lee Evans and cornerback Chris Carr, although Newsome did not dismiss the possibility of their return.
Evans had his hands on the potential game-winning touchdown pass in the AFC championship before having the ball swatted away. Carr missed seven games with thigh and back injuries and started only once.
"Chris Carr and Lee Evans were valuable Ravens," Newsome said. "As we talked about when we informed Chris and Lee of these moves, this does not close the door on them coming back."
Evans was due a $1 million roster bonus March 18 if still on the team. He caught only four passes for 74 yards without a touchdown during the regular season after being acquired from the Buffalo Bills for a fourth-round draft pick.
Baltimore also put running back Ricky Williams on the reserve/retired list. Williams announced his retirement last month.