The star defenseman signed a $6.2 million, one-year contract Tuesday instead of hanging up his skates at the age of 40.
"I feel good about the decision," Lidstrom said on a conference call. "I've already started working out for next season."
Lidstrom was contemplating calling it a career, acknowledging it did cross his mind during the season.
"I did have a thought that this might be it, this might be the last season," he said.
Lidstrom's oldest son, 16-year-old Kevin, is enrolled in a Swedish school and will likely attend it in the fall. That was a factor that increased the chances Lidstrom's NHL career was over.
"Health-wise, it wasn't a tough decision," he said. "It was more of the family end of it."
Lidstrom has spent all of his 18 NHL seasons with the Red Wings, winning four Stanley Cups. He is coming back for at least one more season because he believes the storied franchise has a shot to win it all.
"We can compete with the Blackhawks, for example," he said, referring to Chicago, which leads the Philadelphia Flyers 2-0 in the Stanley Cup finals. "They're playing well, but we could've been in the same boat."
The Swede had nine goals and 40 assists for 49 points last season, his second-lowest total in 14 seasons, and wasn't a finalist for the Norris Trophy for just the second time in more than a decade.
Just two years ago, though, he was honored as the NHL's best defenseman for a sixth time to put him behind only Bobby Orr's and Doug Harvey's total. Last season, he was still Detroit's top player on the blue line.
"I firmly believe he is still the best two-way defenseman in the league," Red Wings general manager Ken Holland said. "And a Sports Illustrated poll of players voted him as the top shutdown defenseman in the league, so it's a great day for the Red Wings to have him back."
Lidstrom has said he is still playing at a high level but doesn't plan to challenge Chris Chelios' longevity in the league. Chelios played last season at the age of 48.
"If I'm going to continue to play, that's not going to be a goal of mine," Lidstrom said with a smile after the season ended.
Lidstrom's aim is to win a fifth Stanley Cup, leading to his decision to take a pay cut after his $15 million, two-year deal expired even though he might've been able to make more because Detroit desperately needed to re-sign him.
"The team got some flexibility," he said.
Nearly a month ago, the San Jose Sharks eliminated the Red Wings in Game 5 of their Western Conference semifinal series.
"As we've watched the playoffs, we believe we can still knock on the door next year," Detroit coach Mike Babcock said. "You can't do that if you're losing players, and we're not. In fact, we've already added a little."
Forward Jiri Hudler signed a two-year contract last month, coming back to Detroit after spending a season in Russia, where Dynamo Moscow granted his release.
The 26-year-old Czech had 99 points his last two seasons in the NHL, helping Detroit win the Stanley Cup in 2008 and reach Game 7 of the finals last year.