Beckham's initial five-year deal ended after the Galaxy won the 2011 MLS Cup and there had been speculation the former Manchester United and Real Madrid midfielder was considering offers from Paris St Germain and a number of English clubs.
However, Paris St Germain said earlier this month the Englishman would not be joining the big-spending Ligue 1 football club due to family reasons.
"This was an important decision for me," Beckham, 36, said in a statement. "I had many offers from clubs from around the world, however, I'm still passionate about playing in America and winning trophies with the Galaxy.
"I've seen first-hand how popular soccer is now in the States and I'm as committed as ever to growing the game here. My family and I are incredibly happy and settled in America and we look forward to spending many more years here."
Beckham joined the Galaxy from Real Madrid in 2007 amid a wave of publicity, signing a league record $6 million a year contract with MLS hoping his high-profile would attract bigger crowds, more sponsors and more mainstream media attention.
However, Beckham faced criticism for his decision to travel back to Europe for England commitments and for his loan move to AC Milan in Italy, which ended in a serious injury.
An Achilles tendon injury wrecked his contribution to the Galaxy in 2010 and cost him a place in England's World Cup squad at the World Cup in South Africa.
Last year, though, the critics were unable to find any cause for complaint.
Just as he came back from being a public enemy in England after being sent off against Argentina in the 1998 World Cup, eventually becoming English football's global ambassador, and just as he turned a lean trophy spell in Madrid into a success with a La Liga title for Real, Beckham won over his detractors.
He finally won his first league title with Galaxy on November 21, the MLS Cup victory over the Houston Dynamo completing another turnaround for one of the game's most polarizing figures.
The Londoner was second in the league for assists, visibly worked hard in the 26 games he featured in and showed off his dead-ball and crossing ability throughout a season in which the Galaxy were unbeaten at home.
"I am thrilled that David has chosen to re-join the Galaxy, especially as he had numerous options where he could continue his career," Galaxy head coach Bruce Arena said.
"I felt that he was one of the best players in all of MLS last season and we could not have achieved the success that we did without him.
"We look forward to trying to replicate that success this season with David once again in a Galaxy uniform."
Simon Fuller, Beckham's business partner and manager, said there was still much more to achieve in Beckham's American adventure.
"When David and I discussed making the move from Real Madrid to the LA Galaxy back in 2007, our minds were firmly focused on the massive opportunity of helping to grow soccer in the United States," Fuller added.
"We have made great progress over the past five years in raising the profile of soccer domestically and the MLS on a worldwide stage, and we are encouraged by all the results.
"However, clearly this is an ongoing mission and this new deal confirms our commitment to continuing our journey and making sure the world's biggest sport, soccer, continues to grow in the world's most passionate sports loving nation, the USA."