The 40-year-old former Barca and Spain midfielder has won eight of 10 trophies contested in just over two-and-a-half years in charge, including an unprecedented treble of Spanish league and cup and Champions League in his first season.
The only failures came in last year's edition of Europe's elite club competition and the Spanish King's Cup, when Barca were knocked out by eventual winners Inter Milan and Sevilla respectively.
His current deal was due to expire at the end of this campaign and although he had been holding out on agreeing a new contract there was no suggestion he planned to leave the club he joined as a 13-year-old.
"FC Barcelona announces that it has reached an agreement with Josep Guardiola on extending his contractual relationship with the club for one more season, until June 30, 2012," Barca said on their website.
"The formal signing of the new contract will take place in coming days," they added.
Under Guardiola, who has said he prefers to renew his contract year by year, Barca have won 117 of 159 matches played, with 28 draws and only 14 defeats.
They have also won all five "Clasicos" against Real Madrid, including handing their great rivals a 6-2 drubbing at their Bernabeu stadium in the Spanish capital and beating them 5-0 at the Nou Camp earlier this season.
BURNED OUT
Guardiola has turned a team that had burned out under his Dutch predecessor Frank Rijkaard into one of the most admired and effective sides in world football.
He has also, crucially, got the best out of Argentina forward Lionel Messi, the World Player of the Year the past two seasons.
Barca are seven points clear at the top of La Liga after 22 matches and have won their last 16 league games, breaking a 50-year-old Spanish record set in the 1960-61 season by a Real Madrid side featuring Alfredo Di Stefano.
