The Iron, for whom Collins made 33 appearances last season despite struggling with an Achilles injury, have the option of a further year.
The 30-year-old former Republic of Ireland Under-21 international joined Scunthorpe from Huddersfield for an undisclosed fee in July 2010.
He has made a total of 69 appearances for the Iron, but his time at Glanford Park has been dogged by injury.
Collins spent all but three games of the 2011/12 season sidelined with Achilles-related tendinopathy and had to wait until late October before making his first appearance this season.
- Sports & Recreation
- Achilles injury