Dunn is now 32 but he has agreed an extension to his contract that will keep him with the club until the summer of 2013.
Rovers manager Steve Kean was happy that Dunn had signed and said: "Everyone knows that not only is David Blackburn Rovers through and through, but he remains a top player and a key member of our squad.
"He has been at the top of his game over recent weeks and we are all delighted to see him extend his association with the club."
Dunn has made 16 appearances this season.