ESPN's Adrian Wojnarowski reported the news Monday.
The Lakers signed Dudley to a one-year deal last July as part of their roster makeover to add more shooting around LeBron James and Anthony Davis.
This will be the second time since 2013-14 that the Boston College product has spent more than one season with a team. He was with the Phoenix Suns for two seasons from 2016-18.
Dudley averaged just 1.5 points in 8.1 minutes per game for the Lakers, though he was able to maintain that shooting touch with a 42.9 three-point percentage. But he struggled to find a significant role in the small forward rotation playing behind LeBron James and Kyle Kuzma.
Despite that limited playing time, the California native has proved himself as one of the most consistent three-point shooters in the league. He is a 39.7 percent shooter behind the arc since the 2009-10 season.