Now 35 years old, Scholes has spent his entire career at Old Trafford scoring 100 league goals in over 400 appearances for the club.
"We are delighted Paul is staying on for another year," boss Sir Alex Ferguson told the club website.
"His form this year indicates his ability and his enjoyment of the game are as strong as ever, and that's every reason to stay on.
"There was talk about him wanting to retire, but when you see his enjoyment in training and playing, you can see how much he wants to carry on."
Scholes said: "I am pleased to have signed for another year. I am feeling good and enjoying my football.
"I would like to thank the boss, the coaching staff and also the fans for their continued support."