The 31-year-old scored 16 league goals in his first season at Wolfsburg but the big-spending club, German Cup winners in 2015, finished in 16th place and needed to beat second-tier Eintracht Braunschweig in the playoff.
"Despite the difficult season where we missed out on our targets, I have the full trust in our team, the club and the fans," Gomez said in a club statement.
"So I decided to play on here next season. The entire environment here will also offer me the best possible preparation for the World Cup (in 2018)," he said with an eye on next year's tournament in Russia.
Club officials praised the forward whose goals in the second half of the season under coach Andries Jonker largely kept them from being relegated.
"Mario Gomez showed with his goals this season that he is not only a top striker but also someone who took over a lot of responsibility within the team," said sports director Olaf Rebbe.
"We are happy to be able to attack the next season together."
(Reporting by Karolos Grohmann; Editing by Greg Stutchbury)
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