The 34-year-old goalkeeper joined Premier League club City on loan from Championship outfit Derby in the summer of 2019 for the 2019-20 campaign.
The Citizens have announced on their official website that they have extended the loan deal for the 2020-21 season.
The Englishman was a back-up to Ederson and Claudio Bravo, who left City earlier this summer.
Carson did not make a single competitive appearance for Pep Guardiola’s side this past season and is unlikely to do so during the 2020-21 campaign, until and unless Ederson suffers an injury.