Although terms were not immediately available, sources told ESPN.com that West will formally sign the new deal Wednesday.
West, who turns 29 this week, averaged 9.6 points, 3.2 assists and 2.3 rebounds per game for the Mavericks last season. He appeared in just 44 games because of a fractured right ring finger and picked up one of the more bizarre fines in league history when he was docked $25,000 for giving Utah's Gordon Hayward a "wet willy."
It was reported earlier Tuesday the Los Angeles Lakers were also interested in West, who shot 46.1 percent from the floor and 35.5 percent on 3-pointers last season for Dallas.
ESPNLosAngeles.com's Dave McMenamin contributed to this report.