The 35-year-old's previous deal was due to expire this summer, but he has now committed himself to Bayern until the end of the 2014-15 campaign.
Pizarro scored 10 goals in 17 games last season as the Bavarian club clinched their second consecutive German title.
"I am very proud that I will play for Bayern again next season. There is no better team in the world for me," the veteran forward told the club's official website.
"We have an amazing squad and will be fighting for silverware again next term."
Pizarro returned to Bayern from Werder Bremen in summer 2012 following a previous six-year spell in Munich.