The goalkeeper, 27, was out of contract and had been linked with a move away from Home Park this summer but he has committed himself to the club for another 12 months.
After putting pen to paper he told Argyle's official website: "I'm delighted. Now that it's all sorted, I can't wait for pre-season.
"I've been happy with my performances and pleased to have played my part in keeping the club in the league.
"I think the fans, who have been terrific, have seen that I've done my best for the club.
"We haven't had many goals against us, especially since the new gaffer came in, which is definitely something we can build on for next season.
"I'm only 27, which is still relatively young for a goalkeeper, and really think that if I continue to work hard my best is still to come."
Cole has made 75 appearances for Plymouth since joining the club on a free transfer in the summer of 2011.