Arroyo appeared in 72 games and made 35 starts at point guard for Miami last season, then decided to return to the club after a brief stint as a free agent. He averaged 6.1 points and 3.1 assists, plus had a stellar 4.17 assist-to-turnover ratio.
"By re-signing Carlos, we feel we have accomplished another big step in adding to this team," Heat president Pat Riley said. "Carlos showed last season that he was one of the most competitive and efficient point guards in the NBA, and we are happy to have him back."
Arroyo, who turns 31 later this month, played college basketball in Miami at Florida International.
He becomes the 13th player under contract with Miami for the 2010-11 season and just the second true point guard, joining fellow returnee Mario Chalmers.