The 40-year-old goalkeeper, who played over 220 times for the Baggies in the Premier League, came out of retirement in the final weeks of the season to help the Hollywood owned Red Dragons win promotion to the EFL.
Foster, who originally spent time on loan at Wrexham in 2005, came in to replace the injured Rob Lainton and saved a dramatic last minute penalty in a 3-2 win over promotion rivals Notts County.
The keeper, who has also carved out a media career with a podcast and a YouTube channel, made eight appearances and kept three clean sheets as Wrexham secured the National League title.
Wrexham fans have been speculating over Foster's future since the end of the campaign - and now it has been confirmed he will spent another 12 months at the Racecourse Ground.
And the ex-Baggies keeper insists he had made his mind up over a further year at the club prior to the end of last season.
He said: "At the end of last season it was obvious that I enjoyed being at the club, I loved being part of the team and everything that Wrexham stands for.
“The fans took to me so warmly, Phil Parkinson is brilliant, Steve Parkin is top class, I love Aidan Davison to bits, and the Co-Chairmen are out of this world.
“I’d decided before the end of last season I wanted to do it, because it feels like home. I’ve never joined a football club and felt at ease so quickly.”