The team said Friday that the slugger exercised his $20 million contract option for 2010. His agent, Scott Boras, informed general manager Ned Colletti of the decision, which Ramirez had until Tuesday to make.
He could have exercised an out-clause in the two-year, $45 million deal he signed in March.
Ramirez hit .290 with 19 home runs and 63 RBIs in 104 regular-season games. He missed 50 games serving his suspension for violating baseball's drug policy.
According to the Los Angeles Times, in the 27 games before his suspension, Ramirez hit .348 with six home runs and 20 RBIs. In the 77 regular-season games after the suspension, he batted .269 with 13 HRs and 43 RBIs.
In the National League Division Series against St. Louis, Ramirez batted .308 with no homers and two RBI. Against Philadelphia in the NL Championship Series, he hit .263 with one homer and two RBI.
"There was no doubt he had his struggles this past season," Colletti said, according to the Times. "We still feel that he's a very good hitter and maybe with a winter off and a chance to regroup, he can come back with a better frame of mind and his confidence rebuilt."
Ramirez's mid-season suspension was to blame for his late-season slump, Boras told the Times.
"That's an unusual circumstance," Boras said, according to the report. "That's something he's never dealt with, mentally or physically."
Boras also said Ramirez's suspension might have affected his value on the open market, had he opted for free agency. But he explained that Ramirez's decision to exercise his option was largely based on his comfort level living and playing in Los Angeles, according to the report.
"Obviously, he enjoys L.A.," Boras said, according to the Times. "If he went into the marketplace, the real negative was that he could end up playing in a place he wasn't comfortable playing."
Ramirez was traded to the Dodgers from Boston in July 2008.
"After playing in Boston, that was important to him," Boras told the Times. "It was going to take the right situation for him to leave where he had taken so long to get to."
Information from The Associated Press was used in this report.