Embargo on Cuba Extended by Obama
The decision was "in the national interest of the United States", the White House said.
Mr Obama has said the trade ban will stay in place until the communist government in Cuba frees political prisoners and improves human rights.
However, Washington has eased travel restrictions on Cuban Americans and restarted diplomatic contacts.
"The president [Obama] has determined that it is in the national interest of the United States to continue for one year the exercise of certain authorities under the Trading With the Enemy Act with respect to Cuba," the White House said.
US presidents have signed one-year extensions of the embargo since the 1970s.
However, Mr Obama's order is largely a symbolic step because the final decision rests with Congress and under the Helms-Burton Act it can only be rescinded when Cuba in effect becomes a democracy, the BBC's Michael Voss in Havana says.
Critics see the move as a missed opportunity to signal a further willingness to ease relations between the two countries, our correspondent says.
Amnesty International urged Mr Obama not to sign the extension, arguing that it prevents Cubans from accessing life-saving medicine.
The embargo was first imposed in the wake of the revolution in Cuba, which swept Fidel Castro to power.
Washington wanted to force the island to reject Mr Castro's socialist policies and embrace capitalism and democracy.
The Cuban government, now led by Mr Castro's brother Raul, has said it is willing to enter into negotiations with Washington, but will not make any unilateral concessions.