The team announced the deal shortly after the 39-year-old forward posted on Instagram on Tuesday hinting at his return.
Signed after going undrafted out of Florida in 2003, Haslem has played exclusively for the Heat since making his NBA debut. He was a part of all three of the franchise's championships and played a pivotal role in helping Miami go the distance in 2005-06.
He's now the sixth player in league history to play such a long career with only one franchise.
"We are proud to welcome our captain back for a 17th season," Heat president Pat Riley said in a statement. "UD is the heart and soul of Miami and we are proud to have him help lead this team once again."
The Miami native is the Heat's all-time leader in rebounds and ranks in the top five in games played, starts, minutes, double-doubles and field goals made.
The Associated Press contributed to this report.