The versatile Swede joined Rovers from Halmstads in January 2012 since when he has played 49 games, scoring one goal.
Olsson finished last season at left-back and Gary Bowyer is happy to have secured the 26-year-old's services for another campaign.
"I'm delighted that he has re-signed for another year," the Rovers manager told the club's official website.
"He has had to wait a long time due to the performances of Tommy Spurr, but the level of displays that he put in at the end of the season against Birmingham, Charlton and Wigan show what a valuable member of the squad he is."
Ahead of the new season, Rovers have also signed up Chris Brown, Luke Varney and David Dunn, while Alex Baptiste has completed a season-long loan move from Bolton.