Spain international midfielder Cazorla, 34, renewed for the 2019-20 season after impressing last term following his return to the Yellow Submarine.
The club announced the news on Thursday at a season ticket campaign presentation in the newly opened Plaza Pascual Font de Mora.
Cazorla was not at the event, but appeared in a video revealing that he had signed on for another season
"My only goal was to stay here and I appreciate the support of the club and coaching staff," Cazorla said.
After re-joining Villarreal – where he left for Malaga in 2011 – from Arsenal, Cazorla scored seven goals and tallied 11 assists in 46 matches across all competitions.
In total, Cazorla has played 288 games for the club throughout his stints and in that time he has scored 41 goals and provided 46 assists.
The midfielder's best days, though, may have been with Arsenal as the Spanish midfielder was a club favourite throughout his time with the Gunners.
Cazorla won two FA Cups and two Community Shields during his stay at the Emirates, also earning Arsenal's Player of the Season following a 2012-13 campaign that saw the midfielder provide 12 goals in 49 total appearances.
The Spaniard made a total of 180 appearances for the Gunners, scoring 29 goals under Arsene Wenger.
Cazorla, whose final three years at Arsenal were wrecked by serious physical problems, was rewarded with a return to the Spain squad for the first time since 2015.
He was handed a call-up by Luis Enrique for last week's 4-1 rout of Faroe Islands in Euro 2020 qualifying.
The 34-year-old midfielder has earned by Spain 79 times and was a member of Spain's Euro 2008 and 2012 championship squads.
He's also participated in two Confederations Cup, in 2009 and 2013, and was a member of Spain's 2014 World Cup squad.
The midfielder has stated in the past that he would like to return to Real Oviedo, his boyhood club, at some point in his career, but will spend at least one more year at Villarreal.