The deal contains a player option for the third year, Rivers said.
His return effectively means that the Clippers are out of the Kevin Durant sweepstakes. Sources indicated to ESPN that the Clippers had been holding off on making offers to their own free agents -- Rivers, Jamal Crawford and Jeff Green -- until they had an indication of Durant's intentions.
Green agreed to a one-year deal with the Orlando Magic on Friday.
A four-year veteran, Rivers, 23, has played his past two seasons with the Clippers, who are coached by his father, Doc Rivers.
"It was tough," Rivers told Shelburne of his decision to re-sign. "But after heavy thinking, I decided I wanted to come back. I'm happy with my decision."
The deal was first reported by The Vertical.
The enduring image of Rivers from the 2015-16 season, and perhaps his NBA career, came in the first quarter of Game 6 of the Clippers' first-round playoff loss to the Portland Trail Blazers. Rivers received an inadvertent elbow to the face from Trail Blazers forward Al-Farouq Aminuand fell to the court while blood flowed.
Rivers received stitches for multiple cuts around his eye, but he returned to the game and finished with 21 points and eight assists.
Rivers averaged a career-high 8.9 points over 21.9 minutes in 67 games with the Clippers last season. He was the No. 10 overall pick by New Orleans in the 2012 draft.