The 36-year-old joined the Saints last season to provide cover between the sticks and has now committed to the south coast club until summer 2018.
Southampton announced the veteran's contract extension by poking fun at the growing trend of overblown signing videos with a tongue-in-cheek clip featuring footage of helicopters, boats, cars and police officers with dramatic music in the background.
Taylor told Southampton's official website: "I'm obviously delighted to have signed for another year.
"It's a great bunch of lads and a great group, and I'm looking forward to working again with a great goalkeeper coach and a great squad of goalkeepers."
The former Arsenal and Manchester City stopper, who is yet to feature for the Saints, will head into his 21st season as a professional hoping to make his first Premier League appearance since 2007.