The 26-year-old former Sheffield Wednesday and Plymouth left-back joined the Cobblers in November 2009 and has made 31 appearances for the club.
"I'm really pleased that Peter is staying. You know what you get with him on and off the pitch," manager Ian Sampson told the club website.
"He is a defender with a good pedigree and was a model of consistency for us last season."
He added: "He's a very good professional and a consistent performer, and you need a number of those in any team.
"This week has helped us move forward and we now know where we stand with most of the players. We've identified our targets and are working hard to add to the squad."
Source: BBC Sport
Source: BBC Sport