Flamini was expected to leave the San Siro outfit with his contract running out next month, but the 28-year-old has put pen to paper on a new one-year deal with I Rossoneri.
A statement from AC Milan read: "Mathieu Flamini, Rossonero since 2008 and also next season."
The midfielder joined Milan from Arsenal in 2008 but missed most of last season with a serious knee injury.
The former Marseille player has made 100 appearances in all competitions for Milan, scoring four goals, and helped them win the Serie A title and Italian Super Cup in 2011.
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