The 25-year-old will complete a decade of service in the summer, and he has now opted to stay with the club for a further three years.
"I'm delighted he's staying in Bremen," said the club's director of sport Thomas Eichin. "Philipp has a great character and he knows how the situation is right now.
"He knows what's expected of him and he wants to join Werder on our path in the years to come."
Bargfrede was part of the Bremen side which won the DFB-Pokal in 2009, reaching the final of the UEFA Cup the same season, and his commitment is a positive sign to the rest of the club as they continue through a difficult period.
"Philipp is a role model and I'm more than happy that he's staying here," said coach Robin Dutt.
"Philipp knows how highly we think of him and he feels very happy in Bremen and with Werder."
Dutt is highly thought of in Freiburg, whom he left to take over at Bayer Leverkusen nearly three years ago.
"I had four wonderful years there, both in a sporting and personal sense," he said. "If both team could end the season without any relegation worries, then I would sign for that."
That is not looking too likely just now, though, with Freiburg only a point above the drop zone and Bremen only seven points further ahead.
"I don't think 29 points are going to be enough," Dutt said. "Our aim is still to reach 40."
After last weekend's 4-1 win over Eintracht Frankfurt, Freiburg will be more optimistic about their chances on Friday night.
"We've finally had a successful result and that's vitally important to give us a bit of breathing space," said their coach Christian Streich, who has to find a replacement for the suspended Gelson Fernandes.
Apart from Santiago Garcia, Dutt has a fully-fit squad to choose from for the trip south.