Bowe, the 23rd overall pick in the 2007 draft, has spent his entire five-year career with the Chiefs.
He appeared in all 16 games last season, starting 14, and had 81 receptions for 1,159 yards and five touchdowns.
Through 75 games -- 70 starts -- for the Chiefs, Bowe has caught 356 balls for 4,927 yards and 36 scores.
"Today was the league's deadline to designate a franchise player and we felt it was in the best interest of the Kansas City Chiefs to place the tag on Dwayne," Chiefs general manager Scott Pioli said.
The former Pro Bowler will earn about $9.4 million in 2012 unless the two sides can agree on a long-term contract.