A former rookie of the year, Carter-Williams split last season with the Magic and Houston Rockets. He played 12 games for Orlando and averaged 5.4 points and 4.1 assists coming off the bench.
After being selected with the 11th overall pick in the 2013 draft by the Philadelphia 76ers, Carter-Williams has bounced around the league with stops in Milwaukee, Chicago and Charlotte in addition to Houston and Orlando.
Carter-Williams is the second player the Magic have retained from last year's playoff team, after agreeing to a four-year, $100 million deal with center Nikola Vucevic. Orlando also agreed to a deal with free-agent forward Al-Farouq Aminu on a three-year, $29 million contract, sources told Wojnarowski.