The Belgium international arrived at Stamford Bridge from Genk in 2011 but has yet to make a first-team appearance.
He had expressed his wish to stay with the La Liga club after playing a key role in the club's 2011/12 Europa League triumph and last term's Copa del Rey success.
"Thibaut Courtois will return to Atletico Madrid next season after an agreement was reached between our club and Chelsea for him to play on loan for another year," read a statement on Atletico's official website on Saturday.
Courtois conceded the fewest number of goals in the league last season, beaten just 29 times in 37 appearances, to help ensure Champions League qualification.
"I am very happy because it was what I wanted," he said.
"I have always said that I wanted to continue at Atletico next season and take part in such an important competition as the Champions League after we qualified for it in such a brilliant way.
"I am only thinking about continuing to enjoy the incredible support that we have and I hope we can continue to bring them a lot of happiness."