Sanderson, who skippered England on tour in Australia last year, will remain at Sixways until at least 2010.
Worcester rugby director Mike Ruddock said: "The plan when I arrived at Warriors was two-fold - to sign new players who would add huge value to the quality of the team, and also to contract our captain Pat Sanderson who is crucial to the ongoing development of this team.
"Now that Pat has signed a contract to 2010, it means we can turn our attention to building a successful team around him that will hopefully challenge towards the top of the Guinness Premiership."
Sanderson, who was overlooked for England's looming World Cup campaign, added: "I hope the fans can see that we are all trying to build something special at the Warriors, and I want to be a part of that.
"The arrival of Mike Ruddock has sparked a real buzz about the future of the club, and the signings we have made during the summer show the club is going forward and determined to compete in the top half of the Premiership."