Chelsea legend John Terry signs one year extension to contract
In an emotional speech after his side's final league game against Leicester on Sunday, the 35-year-old, who was out of contract in the summer, said he wanted to remain at the club.
"Everyone knows I'm Chelsea through and through," said the ex-England skipper.
"I am looking forward to next season under the new manager and hopefully we can make it a successful one."
Chelsea will be managed next season by Italy boss Antonio Conte, who takes over from Guus Hiddink.
Terry has made 703 first-team appearances for the Blues, having started his professional career at Stamford Bridge in 1998.
Chairman Bruce Buck said: "We are delighted John will spend another year at the club.
"He has been the leader of the Chelsea squad throughout the most successful period in our history. He recently reached the 700-appearance mark, which is testament to his professionalism and dedication as well as his undoubted talent."
Terry has won four Premier League titles, five FA Cups, three League Cups, and Champions League and Europa League honours with Chelsea.