The 30-year-old sharpshooter agreed to a one-year, $6.27 million deal, sources said.
Miami secured its floor spacer for at least one more season. Both sides worked to come to terms on an agreement that assisted in alleviating the franchise's tax predicament.
The Heat now have a team salary of $127 million and are over the tax by $3.2 million, according to ESPN's Bobby Marks. The current tax bill for Miami is $4.9 million and the Heat will have until the end of the regular season to get under the threshold.
Ellington, meanwhile, can now veto any trade based on the one-year bird restriction.
He had a career season in 2017-18 with the Heat, averaging personal highs in points (11.2) and 3-point percentage (39.2). He was selected as one of the 3-Point Contest participants.
If he replicates his output from last season, he is expected to be a hot commodity in the 2019 free-agency field.