Owen's present two-season deal was about to expire and, having been overshadowed by Javier Hernandez last season and knowing new signings were expected - in addition to the return of Danny Welbeck from Sunderland, it was anticipated the former England striker would be released.
However, manager Sir Alex Ferguson evidently still views the 31-year-old as an important member of his squad.
"Michael has proved to be a top footballer," said Ferguson. "It is unfortunate that he did not get more opportunities but the form of Chicharito (Hernandez) put everyone in the shade and his partnership with Rooney proved invaluable.
"I am delighted Michael is staying for a further year and we will look to give him more opportunities in the new season."