The 29-year-old scored six goals in 35 appearances in all competitions last term for Milan.
And his form has been rewarded with a fresh deal as new coach Filippo Inzaghi looks to improve on a disappointing campaign.
Milan finished eighth last season and sacked two coaches - Massimiliano Allegri and former player Clarence Seedorf - as a result.
A brief Milan statement released on Wednesday read: "AC Milan announces that Sulley Muntari has renewed his contract to June 30, 2016."
Muntari joined Milan from arch-rivals Inter on loan in January 2012 before signing permanently later that year.
He is representing Ghana at the 2014 FIFA World Cup and played the full 90 minutes of his country's 2-1 defeat to the United States on Monday.
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