The experienced defender sees his current deal expire at the end of June.
But he has now agreed terms on an extension to make him available for the remainder of the current campaign and the 2020/21 season.
Bardsley, 34, joined the Clarets from Stoke City in July, 2017 and has since made 53 appearances for the club.
The right-back has started 14 Premier League games so far this season and was in the Burnley side before the enforced break due to Covid-19.
Bardsley becomes the sixth member of Sean Dyche’s squad to sign a new deal since the end of last season.
The Scotland international follows Nick Pope, Charlie Taylor, Chris Wood, Ashley Barnes and Robbie Brady to have committed to next season and beyond, with midfielder Ashley Westwood also triggering an extension to his deal to stay until June, 2021.
However, midfielder Jeff Hendrick is to leave Turf Moor to end his four-year stay with the Clarets after the club was unable to agree terms on a new deal with the Republic of Ireland international.
And goalkeepers Joe Hart and Adam Legzdins and winger Aaron Lennon are also leaving after reaching the end of their contracts.
Burnley Football Club thanks all for their contribution to the club’s recent successes and wishes them well for the future.