Atletico's president Alexandre Kalil announced the news on his Twitter page, stating: "You wanted him. He is staying."
According to Lance, the former Barcelona forward will earn somewhere in the region of $450,000 (£280,000), along with a share of the club's revenues for shirt sales.
"Since the day I arrived at this club I have been made to feel so welcome," the 32-year-old said.
"I have a great relationship with everybody. The president, my teammates, the coaching staff but most of all the fans, who have really won my affection.
"All of those factors convinced me to stay."
Ronaldinho, who was recently named in the Brazilian league's team of the season, joined Atletico in June. body check tags ::