Molloy scored five goals from 14 starts last season and will be keen to impress following a year disrupted by a troublesome foot injury.
The midfielder picked up his fourth disciplinary point towards the end of 2003 and will serve a one-match ban at the beginning of this season.
New Town manager Aaron Callaghan has also re-signed central defender Des Hope to renew his partnership alongside Ronan Frawley. However both will have some competition for places at the back with the arrival of former Athlone favourite Tom Silke, who previously worked with Callaghan at Longford.
Silke, 26, lost his place at Flancare Park to Brian McGovern and had been attracting the interest of Sligo Rovers and Irish League outfit Glenavon, another former club.
Full back Alan Kelly, midfielders Steven Gavin and Mick Collins and Irish Colleges star Damien Rushe have also agreed new deals at St Mel’s Park.