On July 14, 2016, Conley re-signed with the Grizzlies. His reported five-year, $153 million deal was the greatest contract by total value in NBA history at that point in time. On November 16, 2016, he scored 30 points and hit a career-high-tying seven three-pointers in a 111–107 win over the Los Angeles Clippers. On November 29, he was ruled out for six to eight weeks with a fractured vertebrae. He returned to action on December 16 after missing nine games. In the Grizzlies' 96–92 loss to the Sacramento Kings, Conley passed Pau Gasol to become the all-time leading scorer in Grizzlies franchise history. On January 30, 2017, he scored 38 points in a 115–98 win over the Phoenix Suns. Conley matched his career best with seven three-pointers (in 10 attempts) and made 12 of 18 shots overall in his fourth 30-point game of the season—he previously had just five over his entire career. On February 15 against New Orleans, Conley passed Mike Miller for the most three-pointers in franchise history with 845. On March 29, he matched his career-high with seven three-pointers on his way to 36 points, helping the Grizzlies rout the Indiana Pacers 110–97.