Jackson made the announcement Thursday. The two-time defending champion's coach recently said he was leaning toward retirement after a long season, but he changed his mind after getting a week to rest.
"Count me in," Jackson said. "After a couple weeks of deliberation, it is time to get back to the challenge of putting together a team that can defend its title in the 2010-11 season. It'll be the last stand for me, and I hope a grand one."
Jackson, 64, is the winningest coach in NBA playoff history, with 225 victories and two more titles than Boston's Red Auerbach. He has won a record 11 NBA championships as coach, the most recent coming last month when the Lakers defeated the Boston Celtics to win their second straight title.
"We're extremely pleased that Phil has decided to return," Lakers General Manager Mitch Kupchak said. "With this most recent championship, we've now won five titles in the 10 years he's been our head coach and have been to the Finals in seven of those 10 years, which is amazing. He's not only the best coach for this team, but quite simply the best coach in the history of the NBA."
Jackson put off his decision until he underwent medical tests and spoke to his doctors. His health has been a constant concern in recent years, but he feels strong enough for at least another year. The former New York Knicks player has two replaced hips, a sore knee requiring a brace under his suit during the season, and a previous heart problem.
The Associated Press contributed to this report.