The winger, 32, could earn a further year depending on the number of appearances he makes for the Swans.
"There was recent interest from other clubs, but for me there wasn't really a decision to be made about my future here," Routledge said.
But the deal did not impress former Swansea and Wales winger Leighton James who said: "The general feeling will be one of totally underwhelming."
James added: "It's no disrespect to the boy. For me he's neither a winger nor a midfield player.
"But somebody, somewhere obviously holds him in high regard, hence the offer of a new contract."
Routledge has scored 20 goals in 204 games since joining Swansea in 2011 and says it was easy to agree a new contract.
"The club wanted me to stay here and I wanted to commit myself further. It was a no-brainer.
"For someone who has been at a lot of clubs and has moved around a lot, it's a nice feeling to have finally settled."
Swansea are Routledge's ninth club and he says he has no intention of finding a 10th, despite being linked with a switch to Birmingham City.
"I've been here since our first season in the Premier League and I'm personally very proud of what we have achieved so far. It's panned out so well," he said.
"My daughter was born here, my family is set up here - we love it here.
"To have settled here, start a family and be happy in Swansea - that takes the weight off my mind when I'm on and off the pitch.
"The new contract could take me to nearly 10 years at this club.
"It's been a really enjoyable time of my career and life, but hopefully there are more good times ahead."
Wayne Routledge has signed a new contract at Swansea City until 2019.