Looney proved vital for the Warriors in the postseason, filling an important role in Golden State's rotation after starting center DeMarcus Cousins went down with an injury in the first round of the Western Conference playoffs.
Looney, 23, suffered an injury of his own in Game 2 of the NBA Finals but returned in Game 4 and played through visible discomfort the rest of the series.
His return to the Bay Area is good news for the Warriors, who lost center Jordan Bell to the Minnesota Timberwolves in free agency, a league source confirmed to ESPN.
The Warriors selected Looney out of UCLA with the 30th overall pick in the 2015 NBA draft.
He averaged 6.3 points and 5.2 rebounds in 18.5 minutes per game last season.
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