Gardner and the Yankees agreed on a $2.8 million contract for the 2012 season, avoiding arbitration. Gardner experienced an elbow injury in 2012 and was expected to return in August. On July 16, Gardner suffered a setback and his chances of missing the entire season increased. On July 24, Gardner underwent right elbow surgery, performed by Christopher S. Ahmad, to remove a bone spur and inflamed tissue. He was reactivated on September 25 after Steve Pearce and Justin Thomas were designated for assignment. Gardner played in 16 games during 2012, batting .323 with two stolen bases and three RBI.