Four-time MVP James announced last week that he would return to the Cleveland Cavaliers from next season.
However, NBA finalists Heat appear to have convinced Wade, another of their high-profile stars who followed James in exploring his options as an unrestricted free agent, to stay.
Wade, who has reportedly agreed to a pay cut, announced his decision via social media on Tuesday.
The 32-year-old guard posted a picture of himself beneath Miami's three championship banners on Instagram, accompanied by the caption: "Home Is Where The Heart Is ... My Home, My City, My House..#HeatLifer"
Named as the NBA Finals MVP in 2006, when he won his first championship with Miami, Wade went on to play a part in the franchise's back-to-back triumphs in 2012 and 2013.
He first represented the Heat in 2003 and has been named in the All-Star team for 10 seasons in succession.