The Norway international was out of contract this summer and there was some doubt as to whether he would re-commit to Rovers.
But despite attracting interest from clubs around Europe, Pedersen has opted to stay at Ewood Park.
Staying: Rovers star Pedersen (left) has signed a new deal at Ewood Park
'Blackburn always was my first choice. We have a united team, great management and brilliant supporters,' he said.
'Also, there aren't many footballers who get the opportunity to staywith one Premier League club for 10 years. I did and I want to honourthat.'
Manager Sam Allardyce admitted at the end of the season he did not know whether Pedersen, originally signed by Graeme Souness in August 2004 from Tromso for £1.5million, would agree a new contract or not.
However, now the deal has been done the Rovers boss is delighted to have secured the services of the 28-year-old.
'Pedersen is one of our most dedicated and professional players,' he said. 'We're glad to finally have a contract in place and look forward to the new season.'
Chairman John Williams completed the formalities of the deal with Pedersen and afterwards revealed his delight.
'What appeared to be a lengthy negotiation was always carried out in a positive constructive manner with Morten making it clear that he wanted to stay,' he told Rovers' website.
'Sam is currently on holiday but he'll be delighted, he made this, together with finding a striker, our summer priority.
'He regards Morten as a key member of the squad and his future at Ewood Park is now secure.'
Source: Daily Mail
Source: Daily Mail