The experienced midfielder has also taken on the role of head of youth at the Sky Bet League Two club.
Drummond, who played 38 games last season before a fractured toe brought a premature end to his campaign in March, had previously been reserve-team manager at the Globe Arena.
"I'm obviously delighted to sign for another year," the 38-year-old told the club's official website. "I'm still focusing on playing but I am also really looking forward to overseeing the youth set-up with the idea of bringing more home grown talent through."
Morecambe boss Jim Bentley added: "He's been an excellent servant to the club and still has a lot to offer, not only as a player but in other roles and responsibilities throughout the club."
Drummond began his career with the Shrimps, with his first spell at the club lasting more than a decade. After stints with Chester and Shrewsbury he returned to Morecambe in January 2008.
Meanwhile, chairman Peter McGuigan has announced that he will also take on the role of chief executive.
He said: " I will now have more involvement at the club as we embark on a period of further development."