The deal includes a player option for the 2025-26 season and a no-trade clause, sources said.
This comes after Los Angeles introduced their new players, including James' son, Bronny, and Dalton Knecht.L.A. drafted James' eldest son with the No. 55 pick in the second round of the NBA draft last week.
James' return to L.A. will give him the chance to play with his son, Bronny. It would be the first time a father-son duo has played in the NBA at the same time in league history.
Lakers introduce draft picks Dalton Knecht, Bronny James
Last week, James had opted out of the final year of his contract with the Lakers, worth $51.4 million, for the 2024-25 season. His agent, Rich Paul of Klutch Sports, had said James was "prioritizing a roster improvement" as they looked to reach a new deal.
James, who will turn 40 on Dec. 30, is universally considered to be on the short list of the greatest players to ever step foot on a basketball court. The only player to eclipse 40,000 points scored in NBA history, he is eighth all time in assists, fourth in steals, sixth in 3-pointers made and third in free throws made.
Last season, James became the first player to make 20 All-Star teams, passing Kareem Abdul-Jabbar -- whom he had already passed for the all-time scoring mark -- for the most in NBA history. James' 20 All-NBA selections and 13 first-team All-NBA selections are also the most in the history of the sport.
ESPN contributed to this report.