Bennett, 29, had a stellar season, scoring eight tries in 15 games and earning a recall to Scotland after a three-and-a-half-year absence.
He thrived under new coach Mike Blair, enjoying an attacking freedom rarely seen under Blair’s predecessor, Richard Cockerill.
Bennett joins fellow internationalists Pierre Schoeman, Luke Crosbie, Damien Hoyland and Grant Gilchrist in extending their tenure with Edinburgh.
Blair said: “I absolutely loved working with Mark this season. He really stood out as a leader and we were very impressed with how he behaved with our young players as well.
“We all know that Mark is a threat with the ball in hand and that has been more evident than ever this season. His work rate in the park is outstanding and he also plays with a smile which is really important.
Darcy Graham’s recovery lifts Edinburgh for Glasgow game as Mike Blair has…
“We have a lot of young Scottish players growing in the squad, so having smart, experienced guys like Mark is absolutely vital to the way we play. He’s going to have a huge role to play in both the decider of the 1872 Cup and in the URC play-offs.
Bennett said: “I am really happy to stay at Edinburgh Rugby. It’s a great place, we’re playing smooth, brilliant rugby and building a big house at DAM Health Stadium. I wouldn’t want to be anywhere else. »
Edinburgh take on Glasgow Warriors at BT Murrayfield on Saturday in the 1872 Cup second leg.