Nedved hinted earlier in the season that he could retire at the end of the current campaign, but the 35-year-old has extended his deal at the Stadio Olimpico by another year.
"The basis of my decision was the knowledge that I had experienced seven extraordinary years here," said Nedved.
"And I wanted to relive a European experience with a club that I am deeply tied to."
Nedved, who joined Juve from Lazio in 2001, faced European heartbreak when he was forced to miss the Bianconeri's Champions League final defeat to AC Milan in 2003 - the year he was named European footballer of the year - because of suspension.
Having signed a deal to remain at the club until 20 June 2009, the Czech Republic star will get another shot at Europe next year, with Juve guaranteed to end this season in third place and secure a Champions League spot.