The deal is for four years and worth $32 million, with $20 million guaranteed, a source told ESPN's Adam Schefter.
"Obviously it makes me very happy and excited for this deal to get done,"Stills said. "This is what we wanted from the very beginning and like I said, it's something we wanted from the start - the fact that I wanted to be back here with this team and we were building something special, and so that's exactly why I'm back."
Stills, 24, was Miami's best deep threat last season and led the Dolphins in touchdown catches (nine) and yards per reception (17.3).
He started all 16 games and recorded 42 receptions for 726 yards.
"All the relationships that I've built here in Miami -- every single person in this building, every single person that works for this organization and the fans - from Day 1, have made me feel like I was at home. Like I said, I believe we have something special not only here in this building, but here in Miami. We're going to continue to build on that the best that we can," Stills said.
Stills was vocal about race relations last year and was one of two Miami players to kneel during the national anthem before every game.
ESPN's James Walker contributed to this report.