The deal includes $6 million guaranteed, the source told Schefter.
Dennard was one of the Cincinnati Bengals' most effective defensive backs in 2019, leading the team in catch rate allowed below expectation at 16.3%, according to NFL Next Gen Stats. Overall, he allowed just 16 completions on 36 targets last season.
The Bengals used Dennard primarily as their fifth cornerback and matched him against inside wide receivers.
The former first-round pick out of Michigan State appeared in nine games in 2019 after he started the season on the physically unable to perform list following offseason arthroscopic knee surgery. He didn't make his first regular-season appearance until a Week 7 loss to Jacksonville.
Dennard, 28, re-signed with the Bengals last offseason on a one-year, $4.5 million deal.
Before last season, Dennard never quite lived up to expectations after he was selected 24th overall by the Bengals in the 2014 draft. He was part of a deep position group early in his career, and that, combined with injuries, limited him to only four starts in the first three seasons of his career.
He emerged as a solid nickel cornerback during the past two seasons and was the primary slot corner in 2018, appearing in 13 games and missing three games midseason due to a shoulder injury.
He has 3 interceptions, 22 passes defensed, 2 forced fumbles, 3 sacks and 274 tackles in 77 career games.
ESPN's Ben Baby contributed to this report.