Goodison, 36, has been with Rovers since February 2004, making more than 230 appearances, and has now agreed a contract to keep him at the club until the summer of 2011.
The Jamaican has been the club's player of the year for the past two years and manager Ronnie Moore is delighted to have secured his services for two more years.
He said: "It is great for the club that Ian has agreed his new contract.
He has been our most consistent player over the last three seasons and has deserved the awards he has received.
"He is a leader on the pitch, a winner and a player who is prepared to go through the pain barrier for the Club. "He is a fantastic defender and I'm delighted he will be with us for another two seasons - hopefully in the Championship."
Goodison added: "I'm happy to sign a new contract at Tranmere. I've enjoyed my time here so far and look forward to the next two years."