O’Keefe, 35, will play on for the Sixers and his Premier Club Manly-Warringah.
The Sixers claimed their second BBL title in February and O’Keefe will again be part of the squad to defend the crown next season.
The veteran spinner was also part of the club’s first Big Bash title in BBL|01, eight seasons ago.
In the Final and the Qualifier this season, O'Keefe provided vital contributions with the ball claiming 2-22 from four overs, at the MCG, and 2-27 in the decider at the SCG.
He is currently the third most successful Sixers bowler in BBL history with 48 scalps.
In 88 First Class matches, including nine Tests for Australia, O’Keefe claimed 301 wickets. He famously returned career best figures of 12-70 against India in Pune, February 2017.
His 6-35 in each innings were the best figures taken by a visiting spinner during a Test in India.
O’Keefe claimed 35 Test wickets at an average of 29.4.
His First Class record included 13 five-wicket hauls and a best return of 8-77 for the Blues at Junction Oval in Melbourne during March 2018.
O’Keefe played five matches for the Blues during their 47th Sheffield Shield title last season, which was awarded to NSW after nine rounds due to the coronavirus health crisis.
His 300th First Class scalp came in February at the SCG against Victoria.
He made his Test debut in October 2014 against Pakistan in Dubai and played his final Test in Bangladesh during September 2017.
O’Keefe finished his career with 224 First Class and Sheffield Shield wickets for NSW, at an average of 25. He captained NSW between 2011 and 2013.
The wily left-arm spinner is also fifth on the list of most successful Shield spinners for NSW behind Greg Matthews, Stuart MacGill, Richie Benaud and Johnny Martin.
O’Keefe scored 2,356 First Class runs overall at 25.6, showing his value with the bat down the order that he has done throughout the BBL.
His highest First Class score was 99, coming to the crease at No. 9, against Tasmania in Hobart during February 2015. It was one of 12 half-centuries for him at the First Class level.