The 2008 Olympic road-race champion is one of four riders to commit their immediate futures to the Basque team.
Igor Anton, Mikel Landa and Jon Izaguirre have signed two-year extensions to their current deals.
Sanchez, 34, is now likely to end his career with Euskaltel, the team he signed for when he turned professional in 2000.
Since then, he won the Tour de France King of the Mountains title in 2011 - a year when he also won a stage - the Tour of the Basque Country in 2012 and the now defunct Championship of Zurich classic in 2006.
Euskaltel are set to expand their roster from 24 to 28 for next season.
- Mikel Landa