The Padres had until Saturday to either pick up Giles' $9 million option or pay a $3 million buyout, which would have made him a free agent.
General manager Kevin Towers has said since the end of the regular season that the team was "leaning toward" picking up the option on the 37-year-old, and that Giles offers what the Padres want offensively.
"This guy really makes our offense go," Towers said recently. "He's the type of hitter we like to have, especially in this ballpark [PETCO Park]. Each and every day he plays hard, plays a hard right field."
Giles, who turns 38 in January, finished seventh in the National League in hitting (.306) and sixth in on-base percentage (.398), and he also closed the season with his most hits (171) since 2004, when he had 173.
Giles reached base in 34 of the last 35 games of the regular season, and he hit .340 in August and .323 in September.
Corey Brock is a reporter for MLB.com. This story was not subject to the approval of Major League Baseball or its clubs.