The new deal will keep the 31-year-old midfielder with the Galaxy for the "foreseeable future".
"I'm thrilled to continue my career here with the LA Galaxy," Donovan said on the club's official website.
"This organisation has always treated me with the utmost respect and I feel truly blessed that I am able to continue playing here. The opportunity to play with the team I love and work to win championships, in front of wonderful fans while also being close to my family, is literally a dream come true."
"We are pleased that Landon has re-signed with the Galaxy," said head coach and general manager Bruce Arena. "He is the best player in the history of the game in our country.
"This signing is instrumental toward our commitment to build a team that can compete for championships year in and year out. We look forward to Landon's continued leadership and excellent play as a member of the LA Galaxy."