Jagr, who posted 19 goals and 35 assists in 73 games for the Philadelphia Flyers last season, is the NHL's eighth-leading all-time scorer with 1,653 points.
The 40-year-old Czech returned to the NHL to play with Philadelphia last season after spending three years in Russia's KHL. He spent most of his time on the Flyers' top line.
The big, rugged right wing sustained a groin injury last season that caused him to miss nine games.
"Jaromir Jagr is, without a doubt, one of the best players in the history of this league, and he demonstrated last season that he remains incredibly skilled, productive and valuable," Dallas Stars General Manager Joe Nieuwendyk said.
The GM said the nine-time all-star will become a key cog in the Stars' offense in 2012-13.