The 32-year-old Greece midfielder has spent most of his career at the Athens club, apart from 2003 to 2007 when he enjoyed stints with Inter and Benfica.
"After the current development I will finish my career at Panathinaikos, the team where I started out, and for this I am very happy," Karagounis told the club website.
Karagounis was a member of the Greek squad that won Euro 2004 and has scored six times in 85 internationals.
'I don’t think he’s good enough, passing often goes wrong. We are somewhat limited up front but even then, you have to earn your selection, and I think he doesn’t deserve that now.' Manchester United star Joshua Zirkzee slammed by national team manager
'Manchester United look confused about what they're being asked to do - he's certainly not getting the best out of them., I wouldn't bet a single penny on them getting to the next round' Alan Shearer issues damning verdict of Europa League hopes
