The 36-year-old, whose previous contract was set to expire at the end of the season, rebuffed interest from Premiership outfit Wigan earlier this campaign and has already scored eight goals this term to add to the 28 he plundered in the Bantams' last campaign.
Windass insists he never wanted to leave City but the extra security will not see his performances tail off.
He told the club's website: "When I turned down the Wigan offer, the club said they would reward me and they have done.
"They wanted me to stay and I wanted to stay. I love playing for Bradford and now hopefully I can play a big part in helping them get promoted and push on from there.
"It was flattering to get an offer from a Premiership club at my age but I never wanted to leave in the first place. But I won't be resting on my laurels now; I've got a job to finish here."