The Venezuelan former GP2 champion has just finished a rookie season that saw him score just a solitary point for a 10th-place finish at the Belgian Grand Prix, but he showed glimpses of impressive pace, particularly in qualifying, and brings a hefty sponsorship contribution from Venezuelan state-owned gas company PDVSA.
Team principal Sir Frank Williams said in a statement: "Pastor has proven this year that he is not only quick but also that he is able to maintain a consistent and strong race pace.
"Pastor has been responsible for all of our forays into Q3 in 2011 and his race at Monaco was outstanding.
Pastor has also settled into the team at Williams very well, contributing strongly in the factory and with our partners. He will play a critical role in 2012 as we rebuild the team and move forward."
Maldonado, 26, added: "I am delighted to be able to continue with Williams into my second season and I will give my very best to help the team as we push to return to the front of the grid.
"This has been a tough season for the whole team but it has given me personally the opportunity to learn and develop. I am convinced that the steps we have taken to improve our competitiveness will bear fruit in 2012 and beyond."
Maldonado was partnered by Brazilian veteran Rubens Barrichello during 2011 but the former Ferrari man is thought to be almost certain to leave the team, potentially ending an F1 career spanning 19 seasons and a record 322 starts.
Adrian Sutil is widely expected to make the move from Force India and eventually be confirmed as Maldonado's team-mate.
Williams also confirmed that GP3 champion Valtteri Bottas will be the team's reserve driver for 2012, and anticipated that he will take part in a Friday practice session at 15 grands prix next season, having impressed at the recent Abu Dhabi young driver test.