The 31-year-old defender's previous deal expired next summer.
"I want to thank the club that has always believed in me," Pasqual said on the club's official website. "I am happy to be able to continue to wear this jersey.
"I have signed a contract until June 2015 with an option to extend it for a further year.
"The fact that I can continue at Fiorentina is also the merit of my team-mates and the coach (Vincenzo Montella)."
The Italy international joined Fiorentina in 2005 from Arezzo.
Pasqual started in 35 league games for the Florence outfit last season, helping the Viola finish fourth in Serie A.
"For us Manuel is very important," Fiorentina sporting director Daniele Prade said. "We are all very proud of him.
"Manuel is the prototype of player that anyone would want.
"He is educated, clean-cut and above all, he is a fantastic captain."