The American, 37, is now expected to team up with Brie Bella to take on The Miz and Maryse at Hell in a Cell on September 16.
According to the Wrestling Observer Newsletter, the two sides have agreed terms.
Dave Meltzer said: "Daniel Bryan signed his contract in the last couple of days.
"As of Monday it was not official because WWE had not yet signed it, but that is a formality and it probably will be executed, it if isn't already, any day now.
"Yeah, he's signed. It's been a given for a while."
The WWE had not signed the contract on Monday, but an official announcement is expected to be made in the next few days.
Bryan's previous deal was set to expire on September 1 and he had hinted that he was going to leave the company.
But he revealed that he prolonged signing his new deal because he hired a lawyer to look over the contract.
In WWE, Bryan held the WWE Championship three times and the World Heavyweight Championship once.
In February 2016, he retired from professional wrestling due to medical reasons.
After becoming the SmackDown General Manager, he was cleared to return to the ring on April 8 and fans have been desperate for him to pen the new deal.
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