The 40-year-old Milton-Jones was acquired from New York last season and played in only two games with Atlanta before injuring her right Achilles. She averaged 5.6 points and 2.3 rebounds in a combined 21 games with the Dream and Liberty.
Dream general manager Angela Taylor says Milton-Jones is a "coach on the floor" with championship experience.
She is one of only five players in WNBA history with more than 5,000 career points and 2,500 career rebounds. She played her first six seasons with Los Angeles for coach Michael Cooper, now Atlanta's coach. She helped Cooper and Los Angeles win WNBA titles in 2001 and 2002.
Terms of the deal were not released by the Dream.
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