Schalke director of professional football Youri Mulder emphasised that Dzeko's leadership and quality both on and off the pitch were the primary reasons behind the club extending his tenure.
Praising the seasoned forward's contribution, Mulder added: "Edin brought something special to Schalke 04 during his first four and a half months at the club. He was a key player and a fan favourite, while his personality meant he always set an example both on and off the pitch.
"Our conversations over the past few weeks made it clear that Edin is still as hungry as ever. We therefore believe that he can help us in the Bundesliga too. Edin is staying at Schalke, which is fantastic news."