The Sun-Times reports that the decision was made Friday during a City Hall meeting between Mayor Rahm Emanuel and Joe Ferguson.
Ferguson's term expires in November.
The inspector general and the mayor have been at odds for quite some time. So the re-appointment comes as a surprise.
The mayor says in a statement: "Friday morning, I met with Inspector General Joe Ferguson and we had a positive and fruitful discussion. I am pleased to accept the Inspector General's offer to stay on through next summer and complete the important work currently underway. I look forward to working with Joe to see the City to full Shakman compliance and end four decades of federal hiring oversight. The Inspector General and I share the same underlying goal: protecting the taxpayers of the city of Chicago. We both will continue to work tirelessly on their behalf."
Ferguson challenged the mayor to prove claims that the city was saving $18 million per year collecting garbage on a new grid-system.
Ferguson also sought sweeping subpoena powers to investigate, what he believes, are inefficiencies and waste within city government.
In Ferguson's statement he thanked the mayor for "agreeing to allow me to continue work on wrapping up some unfinished projects."
Several aldermen have been pressuring the mayor to reappoint Ferguson.
The full City Council will vote on the reappointment at City Hall.