The 31-year-old’s current two-year deal was due to expire, which many had thought would signal the end of his stay at Old Trafford due to an unprolific season.
“Michael has proved to be a top footballer,” said manager Sir Alex Ferguson. “It is unfortunate that he did not get more opportunities but the form of Chicharito put everyone in the shade and his partnership with Rooney proved invaluable.
“I am delighted Michael is staying for a further year and we will look to give him more opportunities in the new season.”
Owen made only 11 Premier League appearances last season - ten of which from the bench - yielding two goals.
“I’m delighted to have agreed a one-year extension to my contract,” the striker said of the deal. “To play alongside so many great players, under an exceptional manager, and in front of so many incredibly passionate supporters, is a real inspiration. I can’t wait for next season to start.”