The 33-year-old has 21 Ireland caps - he made his debut against New Zealand in November 1997 and was part of Ireland's 1999 Rugby World Cup squad.
He has also been capped by Ireland at Schools, Students, Under-21 and 'A' levels, and played for the Barbarians in the 2003/04 season.
Dawson said: "I am very pleased and honoured to be offered the opportunity to continue playing with the Ulster squad for another season. I have thoroughly enjoyed the last few months under Matt Williams and Steve Williams and believe that as a squad we have turned a corner and will have a highly successful end of season run.
"I am looking forward to next season with renewed optimism and feel that I can still contribute a great deal to Ulster Rugby.
"Competition for places will be very tough with some hugely talented back- ow forwards like David Pollock, Chris Henry and Thomas Anderson coming through, but I feel that my experience can be of value to a young squad.
"I still get a real buzz when I pull on the white jersey and love to play at Ravenhill, so I am very proud to continue my career at Ulster," he added.
Pleased with the news, Ulster coach Matt Williams said: "Kieron is a great pro with a career full of experience and good leadership skills. He brings a lot to the team, especially the younger players like David Pollock.
"Kieron has been in great form over the last few games and I am just delighted that he has committed to Ulster."