The India and Bengaluru FC skipper spent two seasons with the I-League champions before signing with ISL team Mumbai City FC and returning to BFC on loan last season and leading the club to a second I-League crown in three seasons.
"We are pleased to announce Sunil as a BFC player in what will be his fourth season at the club. I don't think we need to be vocal about what he brings to the club and the kind of impact he has in the dressing room and outside of it," said the club's COO, Mustafa Ghouse.
Chhetri finished top scorer for the club for the third successive season taking his tally across all competitions in a BFC shirt to 35.
The diminutive striker's brace against Kitchee FC in the AFC Cup Round-Of-16 game in Hong Kong last month sparked a comeback from a goal down as Bengaluru carved a bit of history to make it to the two-leg quarterfinals against Tampines Rovers of Singapore be played in September.
"I've always said BFC is family to me. We're doing some amazing things at this club and I'm delighted to pen this deal. We've had a brilliant season and I'm really looking forward to build on it with the team," said Chhetri.