Reid managed 10 games in 2021, having been part of the Swans' group of injured players who initially remained in NSW when the AFL side fled because of COVID-19 cases.
The 29-year-old tweaked his calf after playing the opening six rounds of the season.
Reid was drafted by the Swans in 2009 and played in the side that won the 2012 grand final, making a name for his capacity to clutch contested marks.
Reid signed a five-year contract extension in 2011 then a four-year deal in 2017.
The Victorian's future was up in the air throughout trade period but he and small forward Ben Ronke, who the Swans are also backing to turn a corner after injury woes, have now finalised one-year deals.
Reid may struggle to command a spot in Sydney's star-studded forward line next year but has notably played in defence and as a pinch-hitting ruckman in the past.
"Sam's flexibility to play a variety of roles for us is really valuable," Swans football manager Charlie Gardiner said.
"He brings experience and leadership to our younger players and with a better run of luck with injury, we believe he can be an important player for us next season."
Irishman Barry O'Connor has also signed a one-year deal, while 2014 Rising Star winner Lewis Taylor has been shifted to the club's rookie list.
Sydney returned to finals this year, having finished outside the top eight in 2019 and 2020, but suffered a heartbreaking elimination-final loss to GWS.
26°C