The 36-year-old saw a dream return to Australia with the Central Coast Mariners fall through last week, paving the way for his third and most likely final season at the Stadium of Light as a player.
"In the end, it was a straightforward decision," he said. "I had one or two things to think about and I knew I needed to make a decision. Once the manager gave me the thumbs up, it was easy to sign.
"It has been a tremendous two years for me at Sunderland, I've got to know the players and the staff and the fans have been great to me. It will be my 20th pre-season, they definitely get harder."
"Yorkie's experience, on and off the pitch, has been invaluable to us," added boss Roy Keane.
"He's a great character to have in the dressing room and around the training ground and he'll have a part to play for us next season."