Phil Brown's side are one point off the drop with a visit from champions Manchester United to come in their final league game on Sunday.
Barmby has played a part in two successful promotion pushes and Brown said his dedication to the club has earned him an extension to his present deal.
"He has done enough for me in the last couple of years to command another year and I am delighted Nicky has decided to exercise that," said Brown.
"He was almost carried off the pitch at Bolton last week. He put his all in and we need a little bit more of that on Sunday."
This is the third time that Hull have extended their agreement with Barmby since his arrival.
Since making his professional debut for Tottenham in 1992, he has also played for Middlesbrough, Everton, Liverpool and Nottingham Forest as well as winning 23 caps for his country.
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