The 35-year-old Peru international, who joined Bayern in 2012 for a second spell after three years at Werder Bremen, scored 10 league goals in 17 matches last season, utilised mostly as a late substitute.
Pizarro, the Bundesliga's all-time foreign top scorer with 176 goals in 370 matches, emerged as an invaluable option for coach Pep Guardiola after leading striker Mario Mandzukic fell out of favour towards the end of the season.
"Claudio proved again this season how dangerous he is in front of goal and how important he is for the team," Bayern CEO Karl-Heinz Rummenigge said in a statement.
"We are happy to be able to continue counting on his abilities."
Pizarro played at Bayern from 2001-2007 before returning to Bremen in 2009, for whom he played in 1999-2001, after an unsuccessful two-season spell at Chelsea.
- Sports & Recreation
- Werder Bremen
- Mario Mandzukic
- Pep Guardiola