The new deal will keep the 25-year-old at the club until 2012.
Valdez has previously been linked with a move to Turkish side Fenerbahce.
“We have finally been able to finish the negotiations with Nelson,” general manager Michael Zorc told the club’s official website.
“A couple of reasons played a part,” Valdez told Bild. “Jurgen Klopp knows how to keep me on my toes after the hard times I went through.
“After the red card against Hannover this season, which was tough for me, I was uncertain.
“But I thankfully did not give up. I know how to score at club level and not only for Paraguay.”
