Kuroda, who turns 38 in February, was the Yankees' most consistent pitcher during the regular season. He went 16-11, tying for the team lead in wins, and led New York with 33 starts and 219 2-3 innings.
After losing six of his first nine decisions, he finished with a 3.32 ERA that was second among New York starters behind Andy Pettitte's 2.87.
"I am very happy and excited to re-sign with the Yankees," Kuroda said in a statement. "I am very grateful for all of the interest and all of the offers that I received from the various teams that courted me. It was a tough decision for me to make, but at the end of the day, I wanted to try to win a championship with the teammates that I went to battle with last season."
Kuroda joined the Yankees after four seasons with the Los Angeles Dodgers, had a $10 million base salary last season and earned $1 million more in performance bonuses based on innings. He turned down a $13.3 million qualifying offer from the Yankees, and he would have cost a new team a selection in June's amateur draft.
Pettitte, who came out of retirement to rejoin the Yankees, hasn't decided whether he wants to play next year.