The 26-year-old Australian joined the Black and Whites from arch rivals Hull KR on a 12-month deal at the end of last season and they have moved to exercise an option to keep him at the KCOM until the end of next year.
The former Gold Coast Titans player has made a big impact so far, with nine tries in eight appearances, in partnership with scrum-half Marc Sneyd.
Hull coach Lee Radford said: "I'm really happy with Albert's contribution to the club since he came in.
"He's settled in really well on and off the field and he provides us with that bit of offensive X factor.
"I'm sure there's still plenty to come from him moving forward throughout the remainder of this season."
Kelly left Rovers on a sour note when he was dropped as a disciplinary measure for arriving back late from a spell on compassionate leave in Australia and was a spectator as the club suffered the fate of relegation from Betfred Super League.
He had been linked with a return to the NRL but says he is now settled in east Yorkshire.
"I'm very pleased to have signed my new deal," he said. "My girls are happy, I'm happy and I'm really excited for what's to come.
"It was a no-brainer to extend my contract here. I like to think that I've been playing well recently and I'm in a happy place.
"I like to think I'm getting back to my best form and with another year under my belt, I think I can get better.
"I want for us to be competitive and to be challenging for all three pieces of silverware on offer and make sure that we're fighting to be up there towards the top."