The deal is worth $15 million and includes $6 million in guaranteed money, according to a source.
The Cowboys don't know if they will be able to keep free-agent running back DeMarco Murray, but they have kept one of the best offensive lines in football intact with Tyron Smith, Ronald Leary, Travis Frederick, Zack Martin and Free set to be together for a second season.
With Free returning, Jermey Parnell, who started five regular-season games and two playoff contests because of foot and ankle injuries to Free, will hit the free-agent market and likely find a starting deal elsewhere.
Free, 31, has been a full-time starter since 2010. He started at left tackle at 2010 and 2011 before moving to right tackle in favor of Smith in 2012.
He took a pay cut in 2013, dropping his base salary to $3.5 million in each of the last two years after signing a four-year, $32 million deal that included $17 million guaranteed.
Free is considered the leader of a Cowboys offensive line that features three Pro Bowlers -- Smith, Frederick and Martin. He had offseason surgery on his left ankle but he is expected to be at full health for training camp.