Reigning golden boot winner Heyman, 36, was widely expected to move abroad after her late-career resurgence, amid tensions with the ALW battlers, with links to clubs in England, the US and Europe.
The rumour mill shot into overdrive when West Ham United - home of her close friend and Matildas teammate Katrina Gorry - accidentally published marketing images of Heyman in their kit.
But talks broke down and the move ultimately fell through.
On Wednesday, Canberra confirmed Heyman, who has scored 111 goals in 181 ALW appearances, had signed on for the upcoming season.
Heyman could become the first player to reach 200 ALW appearances next season.
"I am excited to be continuing my football journey with Canberra United, a club that is incredibly close to my heart," Heyman said in a statement.
"I am feeling incredibly good, physically and mentally, and am ready to hit the ground running in the new season."
A HUGE re-signing 💚🥳 Commbank Matildas star Michelle Heyman is staying at Canberra United!— Liberty A-League (@aleaguewomen) After a Golden Boot winning season that saw her earn a Matildas recall, the competition's all-time top scorer has signed a new contract in the capital �� pic.twitter.com/Pu0iJwNkPWSeptember 4, 2024
Heyman was among the most vocal critics of Canberra's instability last season.
United, currently run by Canberra Football, were only able to continue into 2024-25 after the ACT government tipped in $200,000 to support the depleted outfit.
Long-term, expectations are the ALW team will be taken over when a buyer is locked in for a new A-League Men licence in the capital.
Heyman's re-signing is a massive boost for struggling Canberra, who have already lost the likes of Nicki Flannery (Melbourne Victory) and Chloe Lincoln (Western United) to other clubs.
"We are thrilled that Michelle has elected to continue her career in green with us here at Canberra United," coach Antoni Jagarinec said.
"Michelle is unarguably one of the most famous footballers around at the moment, a leading light for the Matildas and a goalscorer of some repute.
"As our leading scorer last season, she was an inspirational figure to our squad, both on and off the pitch, and I have no doubt she will continue to be so."
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