Alfredsson, 39, scored 27 goals and had 32 assists in 75 regular-season games for the Senators last season. He was also the team captain.
"I'm excited to get ready for another season," Alfredsson added. "I've been training for about a month and a half and my body feels a lot further ahead of where it was last year at this point. I expect to come into camp stronger and fitter than I did last year."
Alfredsson is a six-time NHL All-Star, including last season. He was awarded the 2012 King Clancy Memorial Trophy, which is given to the player who best exemplified leadership qualities on and off the ice.
"Daniel's contributions to this hockey team cannot be understated," Senators General Manager Bryan Murray said. "He is a leader and a mentor to many of our young players. Daniel is also a great hockey player and we expect him to return and continue to be one of our best players as we look to improve on last year's accomplishments."
Alfredsson has spent his entire career with the Senators and is the NHL's longest-serving captain, having served in the role since the 1999-2000 season. He is the franchise's all-time leader with 1,131 games played, 416 goals, 666 assists and 1,082 points.
Notable deaths of 2014 [PHOTOS]