With Frank Lampard expected to leave on a free transfer in the summer, Cole also appeared set for a Stamford Bridge exit with just six months remaining on his Blues deal.
But the England international put pen to paper on a new deal – reported to be worth a staggering £200,000 a week – to keep him at Stamford Bridge until the summer of 2014.
“When you are going through this kind of thing, of course you always want to stay here but it was also in my mind that I could be leaving a club where I have great memories, and have enjoyed great times,” Cole told Chelsea’s website.
“I feel I have a good relationship with the people at the club and the fans and it would have been sad if I had had to leave, so I am glad I have signed for one year.
“When I joined Chelsea I just wanted to try to be successful and win trophies and as player you don’t really realise how many games you play each season.
“But to play nearly 300 [matches] in total is brilliant for me, and hopefully I’ll play some more.”
He added: “I feel fit. Everyone was always saying about my ankle in the past but it has not been an issue.
“I feel healthy and the physios at Chelsea are brilliant, they look after you and there are great facilities.
“It is a tough league and very demanding but I think I can keep going for a few more seasons yet.”
Cole has scored seven goals in 293 appearances for Chelsea after completing a switch to the Blues from Arsenal in 2006.