The veteran right-back has been part of the Red Devils' first-team for the past 17 years after making his debut against Torpedo Moscow in 1992.
Neville was forced to battle his way back to full fitness after missing almost the entire 2007/08 season following a serious ankle injury.
The 34-year-old club captain may not be able to play in every match for the Premier League and European champions but he remains an integral member of their record-breaking defence, which has now kept 14 successive top-flight clean sheets.
True professionalNeville told the club's official website: "Manchester United is the only club I have ever wanted to play for so I am delighted to have signed for another year."
The new contract for the England international comes just a week after Ryan Giggs agreed his own one-year extension, with Sir Alex Ferguson delighted to reward such committed members of his squad.
"Gary, Ryan and Paul (Scholes) are the spirit of Manchester United and so we are delighted that Gary has signed for another year," the Scot said.
"Gary is a true professional and I admire how he has overcome an injury which kept him out for over a year, returning as good as ever. He deserves this new contract and we are very happy to have him here."