The six-foot-six Gill, who has become a mentor to young blue-liners like P.K. Subban, signed a deal that will pay US$2.25 million for the 2011-12 season, the same salary he earned the last two years in Montreal.
He could have become an unrestricted free agent on July 1 but decided not to enter the market.
"There are a lot of factors," the 36-year-old said Wednesday at the team's suburban training centre. "You have to think about your family, your career.
"It's financial, but it's also hockey. I'm in a good position here and I like our team and I like Montreal. There's a lot of positives about staying here. My kids are happy in their schools and my wife is happy being in the city. It's a tough market and a competitive spirit every night and that's something I really like being a part of."
He has no thoughts of retiring. The Concord, Mass., native said he hopes to play well enough to earn at least another one-year deal next season.
"It's freezing in the winter but it's fun," he added. "People are excited about every game. My family gets into it and that makes it fun for me."
Gill never had much speed, so if he has lost any with age it doesn't show.
He took some heat from fans earlier in his career when he tried to maintain an offensive element in his game with the Boston Bruins and Toronto Maple Leafs, but he adapted to make defence the priority and was a key piece for Pittsburgh when the Penguins won the Stanley Cup in 2009. He signed with Montreal only a few weeks later.
With the Canadiens, his chief value is in playing in his own zone, battling along the boards and near the crease and blocking shots. He was second on the team with 151 shot blocks last season.
He had two goals and seven assists to give him 35 goals and 136 assists in 13 NHL seasons.
He is also a veteran voice in the locker-room and was especially helpful in guiding Subban, who ended up as his partner on Montreal's top defence pair, through his rookie season.
"He brings leadership and determination on and off the ice, two very important components to the success of our group," general manager Pierre Gauthier said in a statement. "He's an experienced veteran and his contribution to the development of our young players is extremely valuable."
Gill is the first to sign among the nine potential unrestricted free agents on the 2010-11 roster and gives Montreal four defenceman under contract for next season, along with Subban, Jaroslav Spacek and newcomer Alexei Yemelin.
Gauthier has said he will negotiate with Andrei Markov and is expected to sign restricted free agent Josh Gorges, but the fate of UFAs James Wisniewski, Brent Sopel and Paul Mara, or RFAs Yannick Weber and Alexandre Picard remains unknown.
Forwards Jeff Halpern and Mathieu Darche and backup goalie Alex Auld can also be UFAs, while forwards Andrei Kostitsyn, Max Pacioretty, David Desharnais, Ryan White, Benoit Pouliot and Tom Pyatt can be RFAs.
The Canadiens reached the NHL Eastern Conference final in Gill's first season, but were knocked out by Boston in the first round on a Game 7 overtime deflected goal this season.
It left Gill thinking "what if it had gone the other way?" The Bruins have gone on to the Stanley Cup final against Vancouver.
"It's tough to sit out and watch and think what if," he said. "You get excited about the finals, but for me personally, it feels like we should be there and that's one reason I want to stay.
"I want to get there and I think we've come close and done some good things, but we're a step off and we need to work on that step."
When asked who he's rooting for in the final, Gill didn't quite know what to say.
"I'd like to see Vancouver but I'm from Boston so there's a part of me that would like to see Boston, but I don't like the Bruins, so there's a part of me that doesn't want to see them win," he said. "There's a part of me that wants Vancouver to win but I don't like Vancouver, so it's a tough one.
"I'd like to see us get back in it. Can that happen?"
Gill is staying in Montreal until his two daughters finish school and then will go home to Boston for the summer. In the meantime, he is working out with rookie centre Lars Eller, who is coming off shoulder surgery.