General Manager George McPhee says Johansson, 36, will accept a scouting position with the team.
"I am extremely pleased to be staying within the Capitals organization as I begin my next career in hockey," Johansson said. "Washington has been great to me for the past 15 years and I truly appreciate the opportunity to build on that. In pursuing free agency, I realized that it would be much too difficult to put on another team's jersey and I believe I made a great decision by staying with the Capitals."
Johansson is the Capitals all-time leader in games played with 983, a number he compiled in a team record 15 seasons with Washington. He is also the Capitals' all-time leader in points by a defenseman (474), assists by a defenseman (361), and power play goals by a defenseman.