As part of the deal, the Courage will receive $200,000 in allocation money as well as the rights to goalkeeper Katelyn Rowland and the Current's first round pick in the 2023 National Women's Soccer League draft.
The Courage now have three first round picks for the 2023 draft.
"Since coming to North Carolina, Lynn has represented the Courage jersey with the utmost respect and passion," head coach Sean Nahas said in a statement.
"She has given so much to this club, her teammates, the fans, and staff in helping to win titles. More importantly, she has always carried herself with class and she is someone I will truly miss having here. I will always continue to be one of her biggest supporters and will always wish her much success.
"I cannot thank Lynn enough for what she has done here and the trust she has shown me personally in helping her along the way on her journey. She's a special person who will always be a massive part of the Courage legacy."
Williams was loaned to Melbourne Victory in December for the start of the A-league season on a short-term deal until Jan. 7.
She scored on her debut for the Victory when she came off the bench to help them to a 2-1 win over Melbourne City and continued that form with goals in her next two games as well.
She was drafted sixth overall to Western New York Flash in 2015 and stayed with the cub when it moved to North Carolina in 2016. Since then, she has won two NWSL championship titles, three NWSL Shields and an ICC Championship title.
She has scored 48 goals and contributed 20 assists in 100 appearances with the club and was the league leaders in assists for the 2021 season.
Rowland returns to the Courage after being traded to the Current in July of last season. She made four appearances for the club in that time.
"First, I would like to thank the Kansas City organization, my teammates, staff, and fans for the opportunities, experiences and support provided to me during my time here," Rowland said in a statement.
"They have an amazing group of people with a bright future in the NWSL. This opportunity to return back to Carolina feels like I'm returning home. I know this year is going to look a lot different in many ways, but I am excited to be a part of the next chapter. I'm ready to put the crest on and eager to get back to work."