The 37-year-old was due to be out of contract at the end of this year, and despite being in the shadow of teammate Sebastian Vettel, the Finn has opted to stay.
A statement from the F1 team read: "Ferrari announces that Scuderia Ferrari has renewed its technical and racing agreement with Kimi Raikkonen. The Finnish driver will therefore race for the Maranello team in the 2018 Formula One World Championship."
There were doubts over Raikkonen's future when Ferrari president Sergio Marchionne described the driver as a "laggard" ahead of the Austrian Grand Prix, but it seems that both parties are keen for the relationship to continue.
There has been no official confirmation as yet with regards to Vettel's contract situation.