The club are delighted to secure the striker’s signature for an additional year, which ties him to the club until 2018.
Putting pen to paper prior to training, Dobbie said: “I’m loving it! I’ve loved every minute since my return to Queens.
“It’s a great club, we’ve made a great start and you can see that I’m enjoying my football and the rest of the guys are enjoying it too.
“The reception I’ve had from everyone over the past month has been exceptional, it means a lot to me and my family. At this stage in my career and the way things have gone for me so far made it a very easy decision for me to agree an extension to my current deal.
“I just want to keep doing my best and help bring further success to Queen of the South”.
Football development manager, Jim Thomson added: “It’s fantastic news. Stephen has proved to us that he still has what it takes to be a success.
“With his ability and quality he has brought a real feel good factor to the club and compliments the players we already have at the club.
“We are absolutely delighted that he has pledged his future to Queens for a further year and I’m sure we will be the envy of our rivals throughout the country and the news will be very much welcomed by the supporters”.