The 22-year old winger, who has been on loan at Toyota Park since joining from Guatemalan club Municipal in July 2008, has signed a two-year deal to remain with the Fire until at least the end of the 2011 season.
Fire technical director Frank Klopas was delighted to be able to welcome the Guatemala international on board permanently.
"We are very excited to have such a young talent like Marco Pappa back with our club next season," said Klopas. "He was a big contributor to the team in 2009 and has tremendous potential moving forward. He brings a lot of passion to the game and we look forward to having him remain with the Fire over the coming years."