The Senegal striker joined the Paillade in 2007 from Nice and will be spending his 13th season with the club.
Camara scored three goals in 11 league games this season including his audacious match-winning strike against Paris Saint-Germain on April 30.
The attacker is delighted with the deal and looks forward to make more impacts for the side.
"It's really nice to see that my adventure with Montpellier continues," Camara told Montpellier website.
"I am very happy. To always have the pleasure of doing this job, training, playing and bringing my all to the team.
"With the president, it [an extension] was done naturally. I felt a lot of confidence and I will continue to give my best to the team.
"I thank the fans for the incredible support they give to the team. Personally, it gives me the courage and motivates me even more whenever I take to the field."