The contract is worth $1.45 million, a source told ESPN.com's Pierre LeBrun.
Yip was recalled by the Avs on Dec. 18 and finished with 11 goals and 19 points in 32 games. He was second on the team with two goals and two assists in six playoff games.
He missed the first two months of the season with a hand injury and most of March with a shoulder injury.
The Avs also signed free-agent forward Ben Walter to a one-year deal. Walter, who has played in 24 career NHL games with the Devils, Bruins and Islanders, led New Jersey's AHL affiliate with 58 points last season.
Information from The Associated Press was used in this report.