The 28-year-old full back has agreed terms which will see him remain with the club until the end of the 2015 season.
Gidley, who first joined the Knights in 2001, said he was delighted with the deal.
“I’m a Newcastle boy, I played my junior football with Wests Newcastle and have followed the Knights since the club’s inception in 1988,” he said.
“It was always a dream of my brother Matt and I to represent our community by playing for the Knights, and we are lucky enough to have had the opportunity to do so.
“I believe that the Newcastle Knights are building towards a very exciting future with a team that is capable of bringing the Newcastle and Hunter region its third premiership combined with a prosperous future.”
Head Coach Rick Stone believes that this retention news is the boost the Knights need.
“Kurt is an integral part of our club’s community both on and off the field, he is an inspirational captain on the field and I hope that today our members join us by encouraging their friends and family to commit to the Knights,” Stone said.
“Kurt epitomises what is good about the Newcastle Knights and the Hunter region, we are delighted that he is in the position to be a Knight for life by remaining a one club player which is rare in the modern game.”