All players implicated in December's Mitchell Report on performance-enhancing drugs were given amnesty as part of the agreement, which toughens baseball's drug rules for the third time since the program began in 2002.
Thus, the deal eliminated 15-day suspensions assessed against Jose Guillen and Jay Gibbons.
Guillen and Gibbons were suspended in December following media reports linking them to performance-enhancing drugs. Those penalties were put on hold just before opening day as negotiators neared an agreement.
The independent administrator, a position created in November 2005, will be given an initial three-year term and can be removed only if an arbitrator finds cause.
Until now, he could have been fired at any time by either side.
Baseball did not heed advice from the World Anti-Doping Agency and turn drug testing over to an outside agency.
In addition, the decision about whether a player can be subjected to reasonable-cause testing will remain with management and the union, with any disagreement decided by the sport's regular arbitrator.
Also, a joint management-union body called the Treatment Board will supervise the part of the program relating to drugs of abuse, such as cocaine.
As part of the agreement, players will join Major League Baseball's efforts to educate youth about performance-enhancing drugs, and their union will contribute $200,000 to an anti-drug organization.
In exchange for those two provisions, baseball commissioner Bud Selig agreed not to discipline players implicated by Mitchell during his 11/2-year investigation.
"We are gratified that commissioner Selig chose to accept Sen. Mitchell's recommendation that no further punishment of players is warranted," union head Donald Fehr said.