The 29-year-old became the first player in English football history to win four promotions from Non-League to the top-flight with the same club when Town won the Championship play-off final at Wembley in May.
Having started his career with Boreham Wood, the Hendon-born midfielder joined the Hatters in November 2013 on loan from West Ham, before making the move permanent in January 2014 and helping John Still’s side go on to win the Conference title.
With 364 appearances and 23 goals to his name since signing that first permanent deal, Pelly has continually stepped up to prove himself at every stage of the Luton Town journey through the EFL to the Premier League.
Delighted at getting his man signed on again, manager Rob Edwards, said: “Pelly’s story is such a special one, and everyone knows that now. Ever since we came in, his consistency has been brilliant. He is someone who gives everything. He leaves it all out there.
“He leads by example, he’s brave in taking the ball and what he does with it. He’ll assume responsibility for the team. On and off the pitch he is just a huge part of what we do, he’s the heartbeat of the dressing room, a brilliant lad who everyone loves.
“So it’s only right that he now gets this opportunity to play in the Premier League, because he’s worked so hard for it.
“He deserves it and I’m sure everyone will agree with me in that his performances last year in our midfield were outstanding and played such a big part in us getting here. Now it will be down to him and everyone else, because we’ve got to try and stay here.
“We are so pleased that he’s staying and we can’t wait to see him step up again.”
Before his first training session back at The Brache, Pelly added: “It’s great to be back and I’m ready to get to work. Hopefully it’s going to be a great new season for us in the Premier League.
“I’ve got to play the Brighton game to make that history first, but once I get through pre-season it should be all good. We are looking to fight and stay in this league, I cannot wait to contribute to that this season.
“I’ve been at the club for so long, so to get it sorted and get it signed is all good. I’m so happy and looking forward to getting back out there at Kenilworth Road in front of the fans.”
