He signed a three-year deal, the team announced. Terms were not disclosed but the contract is worth $3.35 million annually, according to Sportsnet.
Grabner joined the New Jersey Devils for their playoff run last season after being traded by the New York Rangers at the deadline. But he didn't appear in the final three games of New Jersey's first-round loss to the Tampa Bay Lightning, listed as a healthy scratch starting with Game 3.
Before the February trade, Grabner had been the Rangers' leading scorer in 2017-18, with 25 goals and six assists in 59 games. He had only two goals and three assists in 21 regular-season games for the Devils and didn't produce a point in the postseason.
Grabner was the fourth player in the past 40 years to have a season with 25-plus goals and single-digit assists, according to ESPN Stats & Information.
The Coyotes also re-signed defenseman Niklas Hjalmarsson, giving him a two-year, $10 million contract.