The 32-year-old midfielder sits second on the Perth outfit's all-time appearance list having chalked up 362 so far.
Now he will get the chance to stretch that tally after committing himself to Tommy Wright's squad until May 2020.
"I'm delighted to have it sorted and to be here next season," the former Falkirk and Hibernian player told the Saints website.
"When I came back to the club I wanted to help carry on the success that we've built here and I think as a team we've managed to do that.
"I think there was a bit of disappointment last season for finishing eighth which just shows you how far we've come as a club over the years.
"From a personal point of view I feel like I'm playing at a good level and I think the team is too. The position in the league is really good just now and we're still in the Scottish Cup which is great.
"The talks between the chairman and I didn't take long at all and I've said it before but I would be more than happy to finish my playing career here at Saints.
"I'm looking forward to the rest of this season but it's great to know I'm going to be here next year too."
Craig should make appearance number 363 against Hearts at Tynecastle on Saturday but he admits team-mate Steven Anderson's record of 433 is probably out of reach.
"I think Ando's probably to far ahead of me for me to be able to catch him," he said. "What is good for the club though is you've got Ando, Murray Davidson and I still here with over 1000 appearances between the three of us.
"I think that's what the success of the club has been built on over the past 10 or 11 years. There's been a core group that have been huge for Saints over the past 10 years."
Boss Wright is delighted to see Craig commit himself to the club, adding: "Liam's been great this season and we've changed his role to more of a deep-lying midfielder this year.
"It allows whoever he's playing alongside in there to break forward more and I think he's grown into the position as the season has gone on.
"His experience has been vital for us and he's been an excellent servant to the club. He deserves his contract extension and I'm really happy for him."