“Ferrari announces that Scuderia Ferrari has renewed its technical and racing agreement with Kimi Raikkonen,” a team statement read.
“The Finnish driver will therefore race for the Maranello team in the 2018 Formula One World Championship.”
Raikkonen’s signature comes after he chased home Sebastian Vettel in a dominant Ferrari display in the Hungarian Grand Prix before the mid-season break.
Vettel, who increased his lead over Mercedes’ Lewis Hamilton to 14 points, has yet to confirm his plans for 2018.
His contract expires at the end of the year but the German is expected to keep his solid partnership with the Finn intact for 2018.
“I think I have been public on the Sebastian issue, if he wants to stay he is more than welcome to stay,” said Ferrari president Sergio Marchionne after Hungary.
For Raikkonen, 37, Tuesday’s deal secures his fifth consecutive season with Ferrari after an initial spell at Maranello when he captured the world title in 2007.
He is placed fifth in the 2017 drivers’ standings on 116 points, 86 behind his teammate, ahead of Sunday’s Belgian Grand Prix at Spa-Francorchamps.
The former McLaren and Lotus driver has yet to win a race for Ferrari since his return to the team in 2014, his last success coming at the season-opening Australian Grand Prix in 2013 for Lotus.
His last victory in the iconic red car came back at the 2009 Belgian Grand Prix.
Ferrari have supplied nine of his 20 career GP wins, with another nine coming at McLaren and two behind the wheel of a Lotus.
His 122 starts for Ferrari place him third in the team’s all-time drivers list behind Michael Schumacher (179) and Felipe Massa (139).
Raikkonen’s decision to stay put in Italy alongside Vettel has postponed until at least next season a game of musical chairs amongst the top drivers.
Hamilton is tied to Mercedes until the end of next season with the German manufacturer expected to offer his teammate Valtteri Bottas a new deal for 2018.
And Red Bull will be relieved to hold on to their flying Dutch teenager Max Verstappen and Australian Daniel Ricciardo for another campaign.