Dwyer, 27, was acquired by Orlando City from Sporting Kansas City for a then-MLS record $1.6m of allocation money in July, but his future with the club remained uncertain with his contract having expired at the end of the 2017 season.
“We are happy to have reached an agreement that both Dom and the Club can be proud of,” Orlando City general manager Niki Budalic said. “Bringing him here toward the end of the season was an ambitious move, and we are really pleased with how he adjusted and developed in the short months he had.
“Dom is a big part of this team and we are excited to see what he brings to the group this season and beyond.”
Dwyer, the Cuckfield native who became a United States citizen in March, scored four goals in 12 appearances for the second-year club in 2017. He also earned his first four caps for the US national team, finding the back of the goal in each of his first two outings.
Earlier on Wednesday, Orlando City picked up New York Red Bulls star Sacha Kljestan in exchange for Carlos Rivas and Tommy Redding in a blockbuster deal.
This article was written by Guardian sport, for theguardian.com on Wednesday 3rd January 2018 23.03 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010