The 40-year-old, who has been with the Bees since October, took over the reins in December following Mark Robson's exit, but he was unable to guide them to npower League Two safety as they lost their Football League status following a final-day defeat at Northampton.
Speculation was rife about the former Juventus, Milan and Barcelona midfielder's future, but the Dutchman has confirmed he will stay at the club and attempt to lead them out of non-league.
"Barnet Football Club are delighted to announce that Edgar Davids will remain at the club as head-coach for the new campaign in the Conference Premier," a club statement on the official website read.
"There has been a lot of speculation regarding Edgar's future following the club's relegation from League Two but the head-coach is keen to help the Bees return to the Football League.
"Edgar took sole charge of the team in December 2012 and despite a disappointing end to the season the Dutchman boasted an impressive record which he hopes to continue in the Conference Premier. He is also extremely proud at being able to lead the club into an exciting new era at The Hive."
Chairman Tony Kleanthous is delighted to keep a man of Davids' calibre at the London club.
"I am thrilled that Edgar has decided to remain with the club," Kleanthous said. "The way last season ended was disappointing for everyone involved but there is no doubt in my mind that Edgar is the right man to take us forward.
"He has started a football revolution here and we hope we can maintain the attractive style of play we developed under him in the Football League.
"It is a measure of the man that he wants to stay to finish the job he started. Once a Bee always a Bee!"
Source: PA
Source: PA