Arthur averaged 7.5 points, 4.2 rebounds and 1.4 assists in a career-high 21.7 minutes over 70 games (16 starts) last season. He made a career-high 45 three-pointers while shooting a career-best 38.5 percent from three-point range.
Arthur, 27, has spent the past three seasons with Denver Nuggets.
"Darrell embodies all of the values and characteristics that we look for in a player," general manager and executive vice president of basketball operations Tim Connelly said in a statement. "D.A.'s commitment to our team, organization and city has always been evident and we were thrilled that he chose to stay in Denver and continue being an integral part of what we are building here."
In 443 NBA games (98 starts), Arthur has averaged 6.7 points, 3.7 rebounds and 18.4 minutes with the Nuggets and Memphis Grizzlies over seven seasons.