The 35-year-old former Scotland international had been tipped to retire but, having been given assurances by Seasiders boss Paul Ince, will extend his playing career for at least one more season.
Ferguson told the Blackpool website: "I'm delighted to have signed. I've signed a one-year deal and I will just take it year by year now.
"I did consider it (retirement) to be honest when I went on loan to Fleetwood. It had crossed my mind, but my decision was made when Paul Ince came in to be honest as he put me straight back in to the side.
"My decision was never going to be to do with fitness, it was just a case of getting to that age. I wanted to go out at the highest possible level and the Championship is still a high level for me.
"I'm not looking any further than getting back and playing for Blackpool. I'm feeling as fit as I've been and I think I proved that to people in the last 13 games that I can still play at that level.
"I'm 35-and-a-half now, but I don't see any reason why I can't play another year or two."
Tom Barkhuizen and Adam Dodd have also signed 12-month extensions at Bloomfield Road with the option of a further year.