Fasano's contract with Miami, where he played from 2008 to 2012, is for one year, $3 million with incentives, a source told ESPN's James Walker.
Entering his 12th year, Fasano, 32, said coming back to the Dolphins "weighed heavy" on him in his decision-making process.
"I never had ill feelings when I left," Fasano said. "I always followed and rooted for them and the guys that I knew on the team. I still live in South Florida during the offseasons. It was a great fit, and I look forward to getting to work here."
Fasano was thrust to the forefront as the Titans' chief blocking tight end in a scheme that often deploys two-tight-end sets when tight end Craig Stevens retired in late August. He answered with reliable work in protecting quarterback Marcus Mariota and blocking for running backs DeMarco Murray and Derrick Henry, key pieces of the NFL's No. 3 rushing offense.
"I think it's an important part of the position, somewhat of a lost art in the NFL nowadays, so it's something I take great pride in," Fasano said of his blocking ability. "I do believe to be a good football team, you need to be a good running team, and good running teams have good blocking tight ends. It takes everybody on the field on offense, but I take pride in my run blocking."
Fasano also produced two touchdowns on eight catches while the Titans' top tight end, Delanie Walker, tied for the team lead with 65 catches and went to his second Pro Bowl in a row.
Fasano was a second-round pick out of Notre Dame by the Cowboys in 2006. He has also played in Miami and Kansas City. The Titans signed him in 2015.
ESPN's Paul Kuharsky and James Walker contributed to this report.