Nelson, who agreed to terms last week, was 3-1 with one save in 59 appearances for the Florida Marlins last season. His 2.00 ERA was third-best among NL relievers behind Hong-Chih Kuo's 1.69 and Brad Lidge's 1.95.
"We feel like Joe can really help our bullpen," Rays executive vice president of baseball operations Andrew Friedman said. "He had a tremendous season in 2008 and has been very effective against both left-handed and right-handed hitters."
The 34-year-old Nelson allowed 42 hits while striking out 60 in 54 innings for the Marlins last season.
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