Jagr, a five-time NHL scoring champion who returned to the NHL in 2011 after three seasons in Russia's Kontinental Hockey League, was third on the Philadelphia Flyers with 54 points in 73 games last season.
"Jaromir Jagr is, without a doubt, one of the best players in the history of this league, and he demonstrated last season that he remains incredibly skilled, productive and valuable," Dallas Stars General Manager Joe Nieuwendyk said.
"We see him fitting into our top two lines and contributing heavily to our offensive attack. We're very excited about adding a player of Jaromir's calibre to our club."
The 40-year-old Czech Republic native is a former NHL most valuable player who helped the Pittsburgh Penguins win two Stanley Cups during his 11 years with the team.
He has scored 665 goals and totalled 1,653 points in 1,346 career NHL games, putting him eighth on the league's all-time point list and first among active players.