The Blues on Thursday confirmed the new deal for the 37-year-old, who signed in May 2006 under Jose Mourinho after leaving Nacional, following a period of uncertainty over his status.
Hilario was named on Chelsea's list of released players at the end of the 2012-13 Barclays Premier League season, but this week travelled to the United States for the club's pre-season tour as part of a 25-man squad.
"It feels really good to sign a new contract for another year at the club, I'm very proud," Hilario told www.chelseafc.com.
"I'm really pleased to be part of this great squad and I'm looking forward to working once again with Jose Mourinho."
The goalkeeper, who has made 39 appearances for Chelsea, is one of four goalkeepers in Mourinho's squad, alongside Petr Cech, Mark Schwarzer and Jamal Blackman.
Hilario made his debut against Barcelona in October 2006, keeping a clean sheet in a 1-0 Champions League win. He has kept clean sheets in 18 of his Blues appearances.