Cox had 73 defensive tackles last season, including eight tackles for losses and three sacks. In addition to being a defensive anchor for the 9-9 Alouettes, he also scored a pair of touchdowns.
Financial details weren't released but the team said the contract makes Cox the highest-paid defensive player in the CFL.
"It's about playing football and the love of the game," Cox said on a conference call. "Of course with that said, it's a great honour if I am the highest-paid defensive player in the league. That's really not what it's about though. It's about just being able to play football, play the game that I love the most."
The five-foot-nine 185-pound Columbus native has played all nine of his CFL seasons with Montreal. He was the league's most outstanding defensive player in 2013 and is the Alouettes' all-time leader with 326 defensive tackles.
"Chip Cox is a model of consistency," general manager Jim Popp said in a release. "Never one to draw attention, he just comes to work every day as though it's game day. Over the past six years, I do not think there has been any one player that has consistently affected the game anymore than Chip.
"He hasn't missed a game, he has the uncanny ability to be a game changer at any moment. He gives you the utmost confidence that you have a chance to win when he is on the field and as effective as he is on defence, he is just as effective on special teams when asked to play."
The 31-year-old Cox scored touchdowns last season on a 24-yard interception return and on a 55-yard run after a forced fumble.
"Chip has been Johnny on the Spot for years and in our eyes, is the best defensive player in the CFL," Popp said. "He could have easily been named (most outstanding player) several times. Although Chip has already been one of the highest-paid players in the CFL, we have made sure that he gets his recognition as the highest-paid defensive player in the CFL."
The Alouettes dropped a 40-24 decision to the Hamilton Tiger-Cats in the East Division final.