Terms of the contract weren't disclosed, but the (Minneapolis) Star Tribune reported it was for $10.25 million.
Backstrom, 35, is the Wilds' all-time leader in victories with a 184-124-45 mark over 369 games since 2006.
The Finnish netminder, who was set to become an unrestricted free agent, sports a 2.43 career goals against average and .917 save percentage while racking up 28 shutouts.
Last season was good one for Backstrom as the Wild made the playoffs for the first time since 2008 before losing in the first round to the Chicago Blackhawks.
Carrying a heavy load during the lockout-shortened season, Backstrom went 24-15-3 with a 2.48 GAA, .909 save percentage and two shutouts over 42 appearances, setting a club record with an eight-game win streak from March 14-30.
He missed the post-season, however, after sustaining an undisclosed injury during warmups prior to Game 1 against the Blackhawks.
He underwent successful surgery to repair a sports hernia in May.