Off contract at the end of this year and now aged 34, Gagai's future had appeared uncertain as he entered the final months of 2025 unsigned.
That prompted an online petition for the club to re-sign the former Queensland State of Origin star.
The deal is now complete, leaving Tyson Frizell and Adam Elliott as the remaining two veterans unsigned at the Knights.
"Everyone knows Dane brings experience and competitiveness to every contest, every day," Knights recruitment manager Peter O'Sullivan said.
"He has worked really hard for his extension, his tenacity to never give up and willingness to play in any position, especially through extenuating circumstances, shows his true character.
"This extension compliments and balances our squad perfectly for next season."
Gagai's extension means his career will go into a 16th season, having played 309 games since his debut with Brisbane in 2011.
The centre spent six seasons at Newcastle between 2012 and 2017, before returning to the club in 2022 after a four-year stint at South Sydney.
Gagai has been one of the shining lights for the Knights in a side that has struggled to find form and consistency.
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