The 33-year-old, who joined the club 13 years ago, will now remain with them until next summer, with the option of another year based on appearances.
"I'm very happy to have signed a new contract, I have always wanted to be able to retire at Malaga. Both parties have reached an agreement that we're both pleased with and now I hope to end my career here," he told the club's official website.
"I have been at this club for 13 seasons, which hasn't been easy, but the club and I have both helped each other throughout this period.
"My family and friends are delighted that I'm staying here, and now I'm going to focus on enjoying this great moment for the club."
Duda joined Malaga from Portuguese outfit Vitoria de Guimaraes in 1999.