The 23-year-old was a Hobey Baker Award finalist after scoring 45 points (16 goals, 29 assists) in 36 games as captain for Harvard University last season. He was selected by the New Jersey Devils in the fifth round (No. 150) of the 2012 NHL Draft.
"We are thrilled that Alexander decided to sign with the Avalanche," general manager Joe Sakic said. "He's a highly-skilled, playmaking center who is responsible at both ends of the ice. We look forward to seeing him take the next step of his hockey career with our organization."
Kerfoot, who also considered the Vancouver Canucks and New York Rangers, grew up in West Vancouver, British Columbia, and played for the Coquitlam Express of the British Columbia Hockey League from 2011-13.
Defenseman Will Butcher, who defeated Kerfoot for the Hobey Baker Award as the best player in NCAA Division I men's hockey after a championship season with the University of Denver, remains a free agent with a list reportedly narrowed from 12 teams to four. Butcher decided to become a free agent rather than sign with the Avalanche, who selected him in the fifth round (No. 123) in the 2013 NHL Draft.
The Avalanche finished last in the NHL in 2016-17 with a 22-56-4 record.
