"I am delighted at being able to agree to a new contract which enables me to remain at Old Trafford for the next three years," the 31-year-old player said on the Lancashire website (www.lccc.co.uk).
"I have enjoyed many highs with England over the years but I have not had the same success with Lancashire and that is something I want to address."
Flintoff, who retired from Test cricket after the fifth Ashes Test in August and is recovering from an operation on his right knee, also has a lucrative contract with Indian Premier League (IPL) side Chennai.
"I am looking forward to being around the Lancashire dressing room more now I have retired from Test cricket and this contract will also give me the flexibility to play other forms of One-day cricket around the world," he said.
Lancashire University honours Ganguly
ManU get approval to extend Old Trafford
Laxman shines for Lancashire again
Flintoff hopes to be fit
Whatmore to coach Knight Riders: Ganguly