The Austrian's current deal was due to expire at the end of the current season, but he will now stay at the SGL Arena until the end of the 2015 campaign.
Manninger has started 10 league matches for Augsburg this term, recently returning to the side because of a muscle injury to Marwin Hitz.
The 36-year-old - who joined the club in November 2012 - had no hesitation in extending his stay.
"I've stressed many times that Augsburg and the Bundesliga are just the right challenge for me at the twilight of my career," he told the club's official website.
"The team and the whole club are developing so well. Since my bones are also playing along, and I feel fit, I would like to continue being part of this development next season and carry on savouring the fantastic atmosphere in the Bundesliga and particularly in the Augsburg Arena."
Augsburg's director of sport Stefan Reuter added: "Alex Manninger is an absolute model professional who always puts the team first.
"Not only have his performances made him a cornerstone of our side in the second half of this season, but he was equally important last season and will help us in the future too with his sporting and human qualities."
Manninger has previously represented Arsenal and Juventus among others, winning the Premier League, FA Cup and Serie A during his career.
‘Arteta, Alonso, Emery, me… none of us were physical players – we needed the understanding of the game. That probably helped us move into management’: Premier League boss reveals reasons for natural career progression
‘England have the players to win the World Cup – it’ll be tough for Thomas Tuchel to do a bad job, with the squad he has at his disposal’ Former Three Lions winger backs new boss after gentle qualifying draw
