The Portuguese stopper's contract was due to expire this summer, and despite being managerless, the London club have given the 35-year-old a new 12-month deal.
A club statement confirmed: "Hilario has signed a one-year extension to his current Chelsea contract."
Hilario has failed to dislodge number one Petr Cech since arriving at Stamford Bridge in 2006 and made just one appearance last season - against Manchester United in the Community Shield.
Hilario was 30 when he signed as a free agent from Portuguese top-flight side Nacional in the summer of 2006.
At that stage he was third choice in the pecking order but was promoted to the bench when Carlo Cudicini left Stamford Bridge in January 2009.
The former Under 21 international also had two spells at Porto, the second under Jose Mourinho.
Hilario's Chelsea debut came against European champions Barcelona. He was thrown in at the deep end after Cech and Cudicini were both injured in the same match but Hilario kept a clean sheet in a 1-0 win.
He has played 37 times in total for the Blues and has made 18 Barclays Premier League appearances.[BPL]