The Swede, whose existing deal was due to expire in the summer of 2015, is now set to stay at the Parc des Princes until close to his 35th birthday.
"I don't see a more ambitious club in Europe than Paris Saint-Germain," the former Ajax, Juventus, Inter Milan, Barcelona and AC Milan striker said in a statement released by PSG.
"My wish is that Paris Saint-Germain is my last big club. This club is like me: the dream is never big enough."
"I think I'll finish my career here in Paris," he added.
See Zlatan's colourful career in pictures
"From here, I want to continue working to be the best and with this extra one year contract, I'll continue to give the maximum every day. I am here for the long term, that's the best thing I could have done because Paris is clearly among the top European clubs today.
Ibrahimovic was the first real marquee signing made by PSG's multi-billionaire Qatari owners, designed to propel them into the big time alongside European football's superpowers. David Beckham and more recently the Uruguayan Edinson Cavani followed him to the club.
PSG's Qatari president Nasser Al-Khelaifi was thrilled to be able to keep one of Europe's biggest names at the club for another season.
"The desire of Zlatan Ibrahimovic, one of the best players in the world, to leave a long and lasting legacy at Paris Saint-Germain is a very strong sign," he said in a statement.
"Together, we share the same ambition, to take the Club to the summits of the European game."
Ibrahimovic scored 30 goals and was named France's player of the year as PSG won the Ligue 1 title last season.