The 27-year-old right winger, who was a restricted free agent, had 20 goals and 15 assists last season in 77 games with the Islanders.
"Letting Trent go was never a consideration for us," general manager Garth Snow said in a statement. "He's an important piece to our team. That was never up for debate. We're glad he'll be in an Islanders uniform in September."
Last season, Hunter's fourth in the NHL - all with New York - ranked fifth in the league with 246 hits while picking up only 20 penalty minutes. In 244 career games, Hunter scored 61 goals and helped set up 64 others.
He was a finalist for the rookie of the year trophy during the 2003-04 season, when he posted 25 goals and 26 assists.