The 34-year-old Socceroos veteran was supposedly keen to return to Melbourne, the city of his birth, but opted to remain with the Sky Blues instead.
"I'm delighted to be staying for another year at Sydney FC," he said in a club statement.
"We are building a good squad for next season and the club has some very talented youngsters coming through the ranks so I think that is a huge positive.
"I like the bold ambitions the club is setting and hopefully I can be a big part of that."
Ognenovski became a full-time professional at the age of 27 with Brisbane Roar.