After first moving back to the ABAX Stadium in November, Mclean's original loan contract with Peterborough expired this week but his new deal will keep him with Darren Ferguson's side until the end of the season.
Mclean, who first played for Peterborough between 2006 and 2011, made ten appearances for the club during his first loan period, seven of which were from the start.
He also scored once for Peterborough during their win at Leyton Orient back in December.
Despite now sticking with Peterborough until May, Mclean will NOT be allowed to play for the Posh against City when the two sides meet at the ABAX Stadium on Saturday 28 February 2015 due the terms of his loan agreement.
Mclean's previous City appearance before his return to Peterborough came during the Bantams' match with Sheffield United at the Coral Windows Stadium in October.
Bantams boss Phil Parkinson said: "I think this (extension) suits both parties. Aaron is well thought of at Peterborough and he seems to be closer to the first team there than he would be with us.
"He wants to play and that is obviously up to him now."