The deal includes a club option for 2022. The 32-year-old is set to begin his fifth season with the Union, who open their 2020 schedule Saturday on the road at FC Dallas.
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Bedoya, a New Jersey native, has appeared in 103 games with the Union. He scored four goals with four assists in 32 games last season and helped Philadelphia to the franchise's first playoff victory against the New York Red Bulls.
"[Alejandro] has exceeded expectations we set for him as a leader on the pitch, in the locker room, and throughout the community," Union sporting director Ernst Tanner said in a statement. "It was very important for us to ensure the captain that led us to our first playoff win remains at our club to push us forward and set an example for our young core."
In August, Bedoya made national headlines when he used his goal celebration in a game at D.C. United to call on Congress to act on gun violence, following a pair of mass shootings the previous weekend.
After scoring at Audi Field in the nation's capital, Bedoya ran toward the corner of the field, grabbed an on-field television microphone and shouted into it.
"Hey Congress, do something now. End gun violence. Let's go!" he said.
And last month, the former U.S. international was critical of the national team, accusing the squad of "lacking confidence" as it begins to eye 2022 World Cup qualification.
Over the past seven years, Bedoya has made 66 appearances for the U.S., scoring two goals with eight assists.
He appeared in four World Cup games in 2014.
Information from Reuters was used in this report.
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