The new deal will keep him at the club until the end of next season, with an option in his favour to add another year after that.
Lynch began his career at Tigers in 1999. He then had spells with Bradford Bulls and Hull before returning to the Jungle two years ago.
“This club is moving forward,” Lynch said.
“Powelly [coach Daryl Powell] has built a fantastic working environment here and it’s a great feeling to know I will continue to be part of it beyond this season
“Cas is a great place to be.”
Lynch added: “At this time the body feels good.
“Age is just a number and as long as I still feel I can give it my all then I’ll continue to play.
“Rugby league has been my life, I enjoy every day working here at Cas and I don’t want it to stop.”
Powell said: “Andy Lynch has been unbelievable as a professional and as a player in his time since he has returned to Castleford Tigers.
“I’m delighted he has agreed to extend his stay with us further and look forward to working with him as he helps to drive the standards even higher at the club.”
Lynch missed last weekend’s season opener at Hull KR following a pre-season operation on a hand, but is set to return in Sunday’s home derby against Wakefield Trinity Wildcats.