McArdle, whose original City contract was due to expire in the summer, arrived at the Coral Windows Stadium this Monday afternoon to put pen to paper on a deal which will now keep him with Phil Parkinson's squad until the end of June 2017.
After helping City into League 1 just over a year ago, McArdle continued to establish himself as a key figure in Parkinson's side last season.
The Northern Ireland international played 43 times for the Bantams during the 2012/2013 campaign, with City collecting 13 clean sheets from those games.
The central defender's appearance tally for the season would have been even higher if it wasn't for a number of call ups to the Northern Ireland senior side during the campaign.
McArdle, who celebrated his 27th birthday at the start of the month, also netted three times during the season to take his overall scoring tally for City to seven.
Fresh from signing his new contract, McArdle said: "Having spoken to the manager already this summer, I am excited about the future for the club and I want to be a part of it.
"The progress the club has made in the two years that I've been here already has been very impressed. To me, it shows the club is moving in the right direction.
"I think we acquitted ourselves well in League 1 last season and we want to continue to improve next season."
News of McArdle's contract extension comes only a few days after City confirmed the permanent signing of Matthew Dolan following his loan period at the Coral Windows Stadium from Middlesbrough last season.