The 37-year-old, who set a new lap record of 134.089mph at the Ulster Grand Prix in August, will also race in the British Superstock 1000cc series.
The Bingley rider won Superstock races at the North West 200, TT and Ulster GP this year.
He was also a double winner in the Superbike class at Dundrod on his BMW.
The Yorkshireman finished second in this season's British Superstock 1000cc series.
Hutchinson is also set to continue to compete in the Supersport class, in which he has enjoyed substantial success with Keith Flint's Team Traction Control Yamaha outfit in recent years.
A hat-trick hero at this year's TT and a four-time winner at this year's Ulster Grand Prix, Hutchinson has set his sights on further improvement next year.
He finished second to Michael Dunlop in both the Superbike and Senior TTs in 2016,
"Having now worked together for a season, we know where we need to improve with the obvious goal, to go on now and challenge for the Superbike wins at all of the big three internationals," said Hutchinson.
"The BMW S1000RR still has so much potential in Superbike trim on the roads and with another season of British Superstock planned, the aim there will be to go one step better and win the championship next season."
"Hutchy did a great job for us this season and whether it was in British championship or the roads, he was always in contentions for wins and podiums and provided both our sponsors and fans with a lot of entertainment," added team owner Hector Neill.
"His international hat-trick in the Superstock class and his terrific season in British Superstock proved how well he got on with the Tyco BMW, and to go on and take the world's fastest track lap record at Dundrod was the icing on the cake.
"The goal going forward is to build on that success and I've never hidden the fact that the Senior TT trophy is the one we really want to win in 2017.
It's the blue-riband road race on the season's calendar, and along with Hutchy and our dedicated team we will be giving it our very best shot."

The International Olympic Committee (IOC) executive board approved moving the track cycling and mountain bike events to an existing venue in Izu.
Both were due to be in temporary venues - track cycling in the Ariake district and mountain biking at Sea Forest.
The changes to the programme will bring savings of £66m to the Games budget.
Earlier this year, the Japanese government scrapped plans for a £1.3bn Olympic stadium designed by British-Iraqi architect Zaha Hadid - the designer of the London 2012 aquatics centre.
A new plan costing about 60% of the original is expected to be agreed.
Sea Forest will still host the canoe sprint and rowing events, plus the cross-country and eventing elements of the equestrian programme.
An IOC statement said: "The athlete experience will be guaranteed, as all athletes and team officials whose events will be at Izu will have the option to stay in the main athletes' village before and after their competition.
"During the competitions, they will stay at a satellite village located close to the event venues."
International Cycling Union president Brian Cookson said his organisation had embraced the IOC's cost-cutting programme and the UCI would work with local authorities to build on the sport's legacy in Japan.
All sports have now been assigned venues for Tokyo 2020 except football, with a decision on that expected after next year's Rio Olympics.
Fourteen-time Isle of Man TT winner Ian Hutchinson is to stay with the Northern Ireland-based Tyco BMW team for the 2017 international road racing season.
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Cycling events at the Tokyo 2020 Olympics will be held 75 miles away from the city as part of a £1.2bn programme of cuts.