The 37-year-old left back, who had been out of contract, has made 58 MLS appearances since joining the Galaxy from Roma in 2017.
"We are very excited that Ashley will be returning for us in 2018. He has been a tremendous leader for our club," LA Galaxy coach Sigi Schmid said in a news release. "He has shown he can be successful in this league and we are confident that will continue in the season ahead."
Cole was a bright spot during a dismal 2017 campaign for the Galaxy, recording one goal and two assists in 29 starts as LA finished last in MLS with an 8-18-8 record.
The former Arsenal and Chelsea star returns to a Galaxy defense that has added Venezuelan right back Rolf Feltscher, Norwegian center back Jorgen Skjelvik and the rights to U.S. goalkeeper David Bingham this offseason.