The Portuguese international had looked on the verge of an Upton Park exit after he had spent the last few seasons on the sidelines with injury problems. A goal on the 27-year old's return in the final day fixture against Manchester City has instead prompted new manager Avram Grant to hand him a fresh deal to extend his stay.
Boa Morte was thrilled to be given the chance to add to his 81 appearances for the east London outfit since he signed from Fulham in 2007.
"I am delighted to sign the contract and can't wait to get started," he told the Hammer's official website.
"The new manager Avram Grant is going to play an attacking style and I hope to get involved in that. I am very happy to be at West Ham and look forward to scoring more goals and doing everything I can for the team."
He added: "To be honest, I did have more options and more offers from other people but I wanted to stay here. When the season finished, a few clubs came to me about signing for them but West Ham believed in me and things are looking positive here.
"We have a new manager and I have seen he has done good things with Chelsea and Portsmouth, reaching major finals twice. The fans also had an impact on my decision to stay and I look forward to playing for them again."