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The Scotland international had initially rejected an offer from the club and was rumoured to be lining up either a return to former club Hearts or a trip to the footballers' graveyard of Tannadice.
The reasons for Severin's knock-back were the subject of much debate in the local Aberdeen press between the player, the fans and Dons boss Jimmy Calderwood.
However, RedWeb are now reporting that a deal has been thrashed out that will keep Scotty at Pittodrie until 2009.
He said: "To be honest, we weren't that far away last week.
"I have recently moved to a new house in the area, I love the club and I'm looking forward to staying here and, hopefully, winning some trophies.
"While some seemed to have decided my Aberdeen career was already over, from my perspective, there were just a few personal things to be sorted out."
Seve joined the Dons in June 2004 when his contract with Hearts ran out. His contract was due to end next summer and he could have starting talking to other clubs from this Sunday.
Calderwood said: "I said last week that I was surprised Scott turned down the initial offer, so I knew there was still a chance the deal could be done.
"The news gives everyone here a huge lift and, coming on the back of Danny Griffin's arrival and Michael Hart re-signing, completes an extremely positive spell off the park.
"Now all we need is a performance against Inverness to end the year on a high.
"Hopefully, I will be able to add a couple more players to the squad over the next month and we are waiting to hear back from Kevin McNaughton and Ryan Esson regarding their new contracts."