The 37-year-old initially joined the Club on loan in 2019 until the end of the 2020/21 season.
When his contract with Derby County ended in 2021, he signed for City on a free transfer.
The former England international has now agreed to a further 12 months at the Etihad Stadium.
Having made his senior debut for Leeds United in January 2004 as an 18-year-old, Carson will now continue his career into a 20th season as a professional.
The experienced goalkeeper’s debut for City came in the May 2021 victory over Newcastle United before a second appearance in the Champions League round of 16 second leg with Sporting CP last season.
“I’m excited to be staying at City for the 2023/24 season,” Carson said.
“I love working with Pep, Xabi Mancisidor and our incredible players every day. Hopefully I can help all of our goalkeepers be at their best.”
Director of Football Txiki Begiristain added: “Scott is a real asset to our squad and enjoys a close working relationship with the goalkeepers and coaches.
“We’re very happy he has signed a contract extension. I look forward to seeing him support his team-mates and train well to ensure he is ready to perform on the pitch when called upon.”
Everyone at the Club would like to congratulate Scott on signing his new deal.
