A person with direct knowledge of the decision tells The Associated Press that the veteran forward exercised his player option for $4.25 million on Tuesday. The person spoke on condition of anonymity because the move has not been officially announced.
Dudley had until the end of the day on Tuesday to exercise his option or become a free agent.
Dudley averaged 7.2 points, 3.1 rebounds and shot 38.5 percent from 3-point range in 72 games for the Bucks last season. He gives them a veteran presence off the bench, and one of the few who can reliably hit 3-pointers.
ESPN first reported the decision.