German goalkeeper, whose deal with the Gelsenkirchen outfit was due to run out in June, has accepted a two-year extension to provide backup in a key position
The 33-year-old joined Schalke in October 2011 with an agreement that initially planned for him only to stay until the end of the season, however, he impressed sufficiently to convince the Gelsenkirchen side to offer him an extension.
He will provide an alternative to homegrown product Ralf Fahrmann, who at 23-years-old proved too raw in the German top flight this season, collecting one red card in nine appearances.
Horst Heldt, Schalke's communication executive, said on the club website: "Timo Hildebrand helped [Schalke] during a very complicated situation this year, showing we can rely on him for the upcoming challenges too."
The former German international, capped seven times for the Mannschaft, was released by Sporting Lisbon in May 2011 and joined Die Konigsblauen as a free agent.
Hildebrand was quoted as feeling "at home at Schalke, and extremely delighted at being offered this new contract".
"For me, the October agreement was a fantastic opportunity and I can only be happy to remain a Schalker," he concluded.
Hildebrand won the Bundesliga in 2007 with Stuttgart, his boyhood club, with whom he spent 11 years before moving to Valencia in Spain.