The Wales international arrived at Selhurst Park on a free transfer last September and went on to make 14 appearances as the Eagles won promotion to the Premier League.
Gabbidon started Palace's final seven games of the season in a run which culminated in the 1-0 extra-time defeat of Watford at Wembley.
The 33-year-old former Cardiff City, West Ham United and Queens Park Rangers centre-back will bring vital top flight experience to Ian Holloway's squad.
"I'm delighted to carry on playing for Palace for another season," Gabbidon said.
"I've really enjoyed my time so far as there's a great group of lads here and I can't wait to have another crack at Premier League football playing alongside them.
"The club has amazing supporters and they've been great to me since I joined, and I can't wait to play against the top teams in the country at Selhurst next season."
Meanwhile, Crystal Palace academy players William Johnson-Cole, Kieran Woodley, Aaron Akuruka, Bayan Fenwick, Jack Holland and Kadell Daniel have all left the club after not being offered professional deals.