The Islanders claimed Nabokov off of waivers on January 22, 2011. He is 17-18-3 in 40 games this season.
"I'm thrilled to commit to this team for next season," Nabokov said. "We have a great group in the locker room of young, talented players and we're heading in the right direction. I'm excited to have the chance to help get this team back to the playoffs."
Originally drafted in the ninth round of the 1994 draft by San Jose, Nabokov played nine seasons with the Sharks. He appeared in 563 games during that span, posting a 293-178-29-37 record with a 2.39 GAA.
"Evgeni has proven that he can still play at an elite level in the NHL," Islanders general manager Garth Snow said. "He's given us a chance to win every night and we're excited to have him back for another season."