Four-time NBA champion Green had last month declined the same contract in order to free up space in the Warriors' salary cap as they pursued free-agent superstar James.
But with James signing for the Philadelphia 76ers this week, both Green and Golden State agreed to renew on the previous terms.
The 36-year-old forward, who was on the Rio and Tokyo Olympic US gold medal teams, has spent his entire career with the Warriors since being selected in the 2012 NBA Draft.
Green played a key role alongside the likes of Stephen Curry in the dynasty that captured NBA titles in 2015, 2017, 2018 and 2022.
While not scoring as consistently as in his heyday, Green remains a leader and a vital defensive player for the club.
He reportedly opted out of his player option last month to give his team flexibility in signing James, with the intention of signing a longer-term extension with a lower annual value if the pursuit had been successful.
Green even made a direct recruitment pitch to James. Green told a recent podcast he had spent time with the NBA all-time scoring leader and took "the opportunity to throw my pitch in there."
While Green is staying put, rumours continue to swirl that Curry is being targeted by rival teams, including the Miami Heat.
The two-time NBA Most Valuable Player, 38, has also spent his whole career with the Warriors, and will shortly be eligible to sign a two-year $137 million extension with Golden State.
