Williams has become a key leader since joining Wales’ Capital Region in 2016 and brings a physical presence in both attack and defence.
He was due to come out of contract at the end of the month but following a meeting of PRB/RMB, it has been agreed that 35-year-old will stay at the Blues for one more season.
Cardiff Blues chief executive, Richard Holland said: “We are thrilled to be able to retain the services of Nick, a player who has become such a key figure within our environment.
“Anyone who has watched Cardiff Blues this season, and most recently Judgement Day, will have seen he is still producing the goods on the pitch but on top of that, he brings an enormous cultural benefit to the entire environment. He will now continue to play a key role in mentoring and developing young Welsh talent.
“We would like to thank PRB for their support throughout the process, which has culminated with a positive outcome for Cardiff Blues and our strategy to develop young talent from within, which is ultimately for the betterment of Welsh rugby as a whole.
“Nick embodies all of the values we want at Cardiff Blues and this mentoring role has the potential to become something more long-term.”
Williams has made 66 appearances during his three seasons since joining the region from Ulster, scoring 12 tries in the process.
He has recently set down roots in Barry, with his young family and is delighted to sign on for one year as he continues to impart his vast experience.
Williams said: “I’m very happy and blessed to be able to go again. I spoke to my family and they were all supportive, so I told John in November-time that I was keen to stick around.
“The body feels fresh, mentally I feel good and it all seems to be working for us so I’m happy to get another year.
“After winning the Challenge Cup I thought it was a good way to go out but I didn’t really think about what I could give back to rugby, particularly in regards to bringing young guys through.
“I have a good relationship with the boys. I’m a bit more kicked back and relaxed compared to some of the other boys. I like to lead with action and hopefully the boys follow.
“I really rate the young boys in the squad. We have a good group, who have come through together and are very tight. Hopefully I can help them develop and if they stick together the future is really bright both for Cardiff Blues and the individuals.
“I also like to think I’ve also been playing some decent rugby. We have a recipe here that works. Cardiff Blues look after me through the week and I pay them back by giving 110 per cent on the weekend. I’m grateful to have the opportunity to keep playing here.”
Williams is the latest player to pen new terms at Wales’ Capital Region, following on from the likes of Josh Navidi, Tomos Williams, Jarrod Evans and Willis Halaholo, while Wales duo Hallam Amos and Josh Adams are also joining.
Cardiff Blues head coach John Mulvihill was delighted to retain the services of one of his key leaders and will now turn his attention to further strengthening the squad.
Mulvihill said: “It is great to keep Nick at the Arms Park. He brings a physical presence every time he takes the field and still has a huge amount to offer. Off the pitch he is an invaluable mentor to the likes of Jim Botham, Alun Lawrence and Shane Lewis-Hughes.
“We have further announcements to make in the coming weeks and will continue to strengthen our squad where possible.”