A source tells ESPN senior NFL writer John Clayton that the deal is for two years but that's only for cap purposes.
The star tight end had appeared headed for retirement based on comments he made after Atlanta's NFC Championship Game loss but has reversed course and told Fox Sports of his plans after getting clearance to return from his doctors.
"After discussing it with my family and really, truly struggling with this decision, I informed the Falcons I would like to return for one more shot," Gonzalez told Fox Sports.
Gonzalez later posted a message on Twitter confirming his plans to return.
"I'm happy to say that after speaking with my family, I'm coming back," he wrote. "The lure of being on such a great team and organization, along with unbelievable fan support was too good to pass up. We have a great shot to get to the Super Bowl, RISE UP ATLANTA!"
Earlier Tuesday, USA Today Sports reported that Gonzalez had given agent Tom Condon the OK to negotiate a contract with the Falcons.
In a statement announcing Gonzalez would return, the Falcons said they were pleased by his decision.
"He has been a key component to our success during his four years and it is great to have the opportunity to coach him for a fifth season. Tony is one of the hardest working players I have ever been around and it will be good to have his leadership and work ethic back in our locker room," coach Mike Smith said in the statement.
General manager Thomas Dimitroff credited Gonzalez for being "vital" to the Falcons' success.
"He is a great teammate and is a leader of our football team on the field and in the community. Tony leads by example and his professionalism has paid dividends across our entire organization, and we are very happy to have him as a member of our team," he said.
Drafted 13th overall by the Kansas City Chiefs in 1997, Gonzalez is second on the career receptions list with 1,242 and seventh on the career receiving yards list with 14,268 yards.
The 36-year-old Gonzalez is the most decorated tight end in NFL history, ranking first at the position and sixth overall with 103 touchdown catches.
Gonzalez had eight catches for 72 yards in the Falcons' NFC Championship Game loss, including a 10-yard touchdown reception with 25 seconds remaining in the first half. The Falcons didn't score again as Gonzalez was denied his first trip to the Super Bowl.
"Considering how this season ended, I wanted to give it another run with Matt [Ryan], Smitty [coach Mike Smith] and the guys we have in there. It was the first time I had won a playoff game, and hopefully coming back once more we can take it one step further," he told Fox Sports.
Information from The Associated Press was used in this report.