The 38-year-old left winger had 29 goals and 62 points with the Rangers last season, his first with New York. Following the Rangers' second-round playoff elimination, Shanahan said he wanted to continue his career and had no interest in playing anywhere but New York.
"I had a fantastic time this year and if I play again next year, I'd love to be a part of it," he said in May. "The pieces are there if they want to make it happen."
The Rangers pushed closer to the salary-cap ceiling of US$50.3 million by signing star centres Scott Gomez and Chris Drury to lucrative deals on July 1, the first day of free agency, but maintained they still had enough financial flexibility to bring back Shanahan.
Now that he is in the fold, the Rangers will seek to make deals with goalie Henrik Lundqvist and gritty forward Sean Avery - who spent time on Shanahan's line after being acquired from Los Angeles. Both Lundqvist and Avery are restricted free agents slated for salary arbitration.
Shanahan was second on the team in goals and fourth in points, He missed 15 games after a violent collision with Philadelphia forward Mike Knuble left him with a serious concussion on Feb. 17.
He had one goal and seven assists upon returning for New York's final nine regular-season games and added five goals and seven points for the Rangers in 10 post-season games against Atlanta and Buffalo.
Shanahan's numbers could improve next season with Drury on the No. 2 line. The Rangers juggled players all season trying to find the right mix since they didn't have a natural centre to play with Shanahan.
His one season in New York had plenty of significant moments. Shanahan became the 15th NHL player with 600 goals when he scored twice against Washington during his Rangers debut last Oct. 5. He also reached the 20-goal mark for the 18th straight season, joining Gordie Howe as the only players to do that.
Shanahan leads active players and is 12th overall with 627 goals. The eight-time all-star, who earned US$4 million last season, has 1,294 points in 1,417 regular-season games. In the playoffs, Shanahan has 53 goals, 119 points and three Stanley Cup titles in 157 games.