Saunders, who has been at Griffin Park for four years, was out of contract at the end of this season as the Bees lost the League One play-off final to Yeovil.
Sporting director Mark Warburton told the club's official website: "After very positive discussions last week, we are delighted to announce that Sam has agreed a new two-year contract at the club.
"Over a four-year period Sam has displayed his level of professionalism and of course ability, allied to his clear passion for the club and for playing a role in taking us forward to achieve our evident goals and ambitions."
Goalkeeper Antoine Gounet will leave the club this summer while influential midfielder Harry Forrester, the third and final Brentford player out of contract, is still yet to get back to the club regarding his contract offer.
Harlee Dean and Adam Forshaw, contracted to the Bees until the end of next season, are also weighing up extended terms.
Striker Antonio German, 21, has indicated he will not be accepting his offer of a professional deal.