Under the agreement, which takes effect in October, the Oilers will manage all hockey operations for the Falcons, including the hiring of the team's coaching staff.
The Falcons have been affiliated with the Tampa Bay Lightning.
"We are pleased to once again have our own primary affiliate in the American Hockey League," said Kevin Lowe, the Oilers' general manager. "The AHL has proven itself as the top developmental league in the world, and it is important to the success of the Oilers to have our own affiliate in a competitive league where our young players can develop their skills for the NHL."
The 2007-08 season will be the 26th season the Oilers have been associated with the AHL. They were last affiliated with the Edmonton Road Runners three years ago.
The Falcons (26-39-1-2) are in last place in the Atlantic Division of the AHL's Eastern Conference.