Financial terms of the deal were not disclosed but local media reported the contract, which will keep Anderson with Ottawa through the 2014-15 season, is worth $12.75 million.
"The (goaltending) position is one that we need if we're going to retool, rebuild and improve this hockey team going forward," Bryan Murray, general manager of the Eastern Conference's last place team, said in a statement.
"Very definitely, Craig has stepped in and allowed our team to play hockey the way we think we have to play going forward."
The 29-year-old goalie, traded to Ottawa by the Colorado Avalanche, has a 6-4-0 record with a 2.11 goals against average in 11 games with the Senators.
"It's just been a great spot here to come and take the opportunity to show what I can do," said Anderson, a career backup goalie for most of his eight-season NHL career.
(Reporting by Gene Cherry in Salvo, North Carolina; Editing by Frank Pingue)