The 25-year-old forward, who was a restricted free agent, avoided a salary arbitration hearing scheduled for July 20.
Iafallo had 33 points (15 goals, 18 assists) in 82 games with the Kings last season, his second in the NHL.
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"You've seen him playing with our top players like [Anze] Kopitar and [Dustin] Brown on the top line, and that shows you a lot, that you've got a kid who is able to think and do what the coaches want him to do, playing such an important role," Los Angeles director of player personnel Nelson Emerson said. "If you slide him down on a different line, he's able to do that too."
Signed by the Kings as an undrafted free agent April 18, 2017, Iafallo has 58 points (24 goals, 34 assists) in 157 NHL games and one goal in three Stanley Cup Playoff games.
"He came right in and right from the get-go he kind of earned a position on our hockey team when we were looking for young players with energy," Emerson said. "He started grabbing everybody's attention by his skating, his tenacity and his ability to do what the coaches liked."
