Peppers, 38, has re-signed with a one-year deal, the team announced Wednesday. The deal is worth $5 million, with $2.5 million guaranteed, a league source confirmed.
All indications a year ago, when Peppers returned to the team that selected him with the second pick of the 2002 draft, was that the 2017 season would be his last.
But after tying Mario Addison for the team lead in sacks with 11 and falling short of his goal to win the Super Bowl, he opted to return.
While the Panthers haven't been aggressive in free agency, reaching a deal with a player from another team only with Washington cornerback Bashaud Breeland thus far, securing Peppers was key to general manager Marty Hurney's offseason plan.
Peppers signed a six-year, $91 million deal with Chicago in 2010 but was cut during the 2014 offseason, with the Bears scheduled to take an $18 million salary cap hit.
He almost rejoined the Panthers that year but instead signed with the Green Bay Packers for the chance to play standup end in a 3-4 scheme. He had played in a 4-3 scheme his entire career at Carolina and Chicago.
Peppers made the Pro Bowl for the ninth time in 2015, collecting 10.5 sacks.
He returned to Carolina last offseason to finish his NFL career in his home state. The Panthers kept him fresh throughout 2017 by giving him days off and tightly managing his practice time.
Peppers left the door open for a return after the season, with several teammates and head coach Ron Rivera saying they wanted him back.
Peppers ranks fourth on the NFL's all-time sack list, with 154.5. He is 5.5 behind third-place Kevin Greene, who played his last season at Carolina.