Britain's Jenson Button will race for McLaren-Honda in 2016.
The 2009 world champion had been considering his future but the 35-year-old said McLaren's determination to improve following a difficult year was decisive in his decision to race on.
McLaren chairman Ron Dennis said an option to end his contract "became an irrelevance" once he was sure Button was "as committed and focused as ever".
There was no mention in the statement of Button's team-mate Fernando Alonso.
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The Spanish two-time world champion is contracted to the team until the end of 2017, but his future is in doubt after he said following the Japanese Grand Prix that he "didn't know" whether he would be racing in F1 next year.
He later put out a series of tweets which seemed to reconfirm his commitment to the team.
Asked why there was no mention of Alonso in the statement, a McLaren spokesman said: "Today is about Jenson."
Button, who has been with McLaren since 2010, had refused over the weekend in Japan to say anything concrete about his future.
But the McLaren statement made it clear that he would be retained on the terms of his original contract, which dictates a pay rise from $10m (£6.9m) to $15m (£10.3m) next season.
Dennis added that Button's "wealth of experience makes him a massively valuable asset to our team - he is also supremely fit and as super-fast as ever".
Button said: "Over the past month or so I have done quite a lot of thinking, and it is no secret that I was at one point in two minds about my future.
"But I have been a McLaren driver for six seasons now, and in that time I have got to know Ron very well.
"He and I have had some very good chats these past few weeks, and during those chats it has become clear to me that Ron is both utterly determined and uniquely equipped to lead our team through its current difficulties to great successes in the future.
"That gives me great confidence, and it is for that reason that, together, he and I have decided to continue our partnership.
"As soon as I had made that decision, straight away I realised it was the correct one."
|279 Formula 1 starts||1 world championship (2009)|
|15 grand prix wins||50 podium finishes|
|8 pole positions||8 fastest laps|
McLaren have had a difficult season in 2015 and are ninth out of 10 teams in the constructors' championship with little prospect of improvement in the remaining five races.
The lack of performance is largely caused by the Honda engine, which is uncompetitive in the extreme in the Japanese company's first year back in F1 since 2008.
Button said: "Granted, this year has not been an easy one for us, but we know what we need to do to improve things and, in collaboration with Honda, we will work extremely hard over the next weeks and months in order to make sure that 2016 will be a much better season than 2015 has been."
|BBC Sport F1 commentator Allan McNish|
|"Jenson must feel that McLaren are confident of going up the grid in 2016. When you are used to winning races, fighting for 15th place is not fun at all.|
|"It's possible for McLaren and Honda to do it but it will be very, very tough. Ferrari leapfrogged Red Bull and Williams this season and they have won three grands prix. It's possible but Honda are further behind."|