Valencia was asking for $1,675,000 and the Blue Jays countered with $1.2 million. Last season, his salary was $532,500. The 30-year-old player was eligible for arbitration for the first time.
Arbitrators James Oldham, Sylvia Skratek and Edna Francis ruled Friday, a day after hearing arguments.
Valencia batted .258 last year with four homers and 30 RBIs in 284 plate appearances for Kansas and Toronto, which acquired him July 28 for pitcher Liam Hendriks and catcher Erik Kratz. Valencia played first, second and third base.
Third baseman Josh Donaldson is Toronto's last player in arbitration.
In the first arbitration decision of the year Thursday, the Miami Marlins defeated pitcher Mat Latos, who will make $9.4 million rather than his request for $10.4 million.