Baird, who shot to prominance in the FA Cup final, found appearances limited last season, going out on loan to Walsall and Watford.
Baird Signs New Deal
Baird, who can play at right back or on the right of midfield may well have good reason to stay. Captain Jason Dodd is well into the twilight of his career and Darren Kenton has failed to make the impact his talent warrants.
Baird said: "I am delighted it has all been sorted out. It has taken a few months but it is good to have it all done. "I had a lot of options and offers but I really wanted to stay with Southampton. I love the club and the city and I never wanted to leave.
"With a new manager coming in, it is a fresh start for everyone and hopefully now I can work hard and establish myself in the first-team reckoning. I have been here for six years and I have enjoyed every minute. It is a great club and the Premiership is where I want to be. It is up to me now to ensure I make it."