Earlier this season, the Bantams turned down a shock £350,000 offer for the 36-year-old from Premiership side Wigan Athletic. Windass said the offer was "flattering" but "never wanted to leave" the League One club.
Bantams chairman Julian Rhodes said: "We were talking to him about a contract before the Wigan interest so this is nothing new.
"Dean made it quite clear that he wasn't going anywhere else. Once we managed to fend off Wigan it was just a question of getting it all tied up.
"As well as Wigan, we know there are a number of clubs in the Championship that would have him and there have been a number of other inquiries."
Windass played his last game for Hull City in 1995 after four years at the club, going to Aberdeen in a big-money move. A return to his hometown club has been frequently speculated ever since then, but now it looks like all fans' hopes of that happening are over, in a playing role anyway.
Earlier this year the former Middlesbrough forward ruled out any chance of it happening: "There was a time when I would have walked over broken glass to go back and play for Hull again but things change."
He has also been in the news recently over allegations from Southend goalkeeper Darryl Flahavan and Bournemouth's Marcus Browning that he has bitten them during matches.