The long-serving midfielder, 31, will begin his 15th season at Griffin Park next term.
O'Connor has been sidelined since November with an ankle injury but has resumed training this week.
Bees manager Uwe Rosler told the club website: "It is very important we give Kevin, a player who has dedicated his whole career to Brentford football club, the chance to come back from his bad injury.
"He has been unfortunate last year and this year with two injuries.
"It is important to have an experienced player, a player who has a good attitude to his job every day around on the training pitch.
"He is a player who can play in different positions for us and he does everything in the interests of Brentford FC.
"It was very important for me to keep Kevin on board. We have a very young squad, we need experience around the group. He will offer that in abundance."