The move would see Dhawan return to his hometown team for the first time since the inaugural season in 2008.
The 32-year-old veteran will bring his vast experience in the IPL and adds solidity to the team's top order as they look to rebuild under a new management team.
Welcoming the addition of Dhawan to the team, Parth Jindal, Director- Delhi Daredevils, said: "We are thrilled at the prospect of having Shikhar turn up in DD colours for the next season of the IPL.
"Shikhar has had a hugely successful IPL career and will be an invaluable addition to team DD with the wealth of experience he brings. The Delhi fans love seeing their local boys in action and we're sure they will get lots to cheer for this season with players of Shikhar's calibre in the team," he added.
A prolific opening batsman, Dhawan stands sixth on the IPL run-scoring table having scored 4,058 runs in 143 matches, at an average of 33.26 and a strike rate of 123.53.
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