The 37-year-old striker has been in excellent form in recent weeks and the club announed the new deal on Friday night.
Manager Pedro Caixinha had been coy about the player’s future at Thursday’s weekly press conference, suggesting Miller might have to wait until the end of the season before finding out about his future.
But the deal has now been announced, extending the centre-forward’s third sojourn with the Ibrox club.
Miller, who was voted Rangers’ player of the year last weekend, told the club’s website: “I am over the moon to get it signed and I’m looking forward to the last few games of the season and then building towards a better, more competitive year next season.”
Caixinha added: “It is fantastic for everyone at the club that Kenny has agreed to stay with us for another year.
“I have been greatly impressed by his professionalism and leadership both on and off the field since I arrived here, and I believe his performances demonstrate he still has so much to offer us.”
Miller has scored 12 times this season.