Financial terms were not disclosed, but the deal is reportedly worth $8.1 million with a $3.5 million signing bonus.
Bruschi, 31, was eligible to become an unrestricted free agent after the 2004 season.
A defensive co-captain, Bruschi started every game at inside linebacker last season and ranked second on the team with 137 tackles and had three interceptions, two of which he returned for touchdowns.
He also recorded two sacks, 16 passes defensed, three forced fumbles and one fumble recovery.
Bruschi has spent his entire eight-year career with the Patriots, starting 72 of 120 games and earning two Super Bowl rings.
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