The 31-year old USA international had been pondering either retirement or a move to Europe next year but has backtracked on those thoughts by penning a multi-year deal with the back-to-back MLS champions.
"I'm thrilled to continue my career here with the LA Galaxy," Donovan said in a statement.
"This organization has always treated me with the utmost respect and I feel truly blessed that I am able to continue playing here.
"The opportunity to play with the team I love and work to win championships, in front of wonderful fans while also being close to my family is literally a dream come true."
Since joining the Galaxy from Bayer Leverkusen in 2005, Donovan has helped the club clinch the 2005, 2011 and 2012 MLS Cups, the 2005 US Open Cup, the 2010 and 2011 Supporters' Shields as well as enjoying loan spells with Bayern Munich and Everton.