The 31-year-old’s previous deal was due to expire in the summer.
A statement on Rangers’ official website read: “Sasa Papac has shown his passion for Rangers by putting pen-to-paper on a new one-year deal at Murray Park this morning.
“The news will be a big boost for Ally McCoist who has always stated his admiration for the Bosnian who was a hugely consistent performer during Walter Smith’s second spell in charge of the Light Blues.”
