It also held Rotherham and Barnsley Councils, and gained a seat on Doncaster Council, which has no party in overall control.
The Liberal Democrats, who were hoping to take over the reigns at Sheffield Council for the first time since 2002, failed to gain any seats from Labour and lost Central ward to the Green Party.
Tories, too, were disappointed after they did not take their sole target seat in Dore and Totley.
There was also concern after the far-right British National Party came second in Southey and Shiregreen and Brightside wards, and polled a total of 2,906 votes across the four wards where its candidates had stood.
But Coun Jan Wilson, who remains leader of Sheffield Council after retaining her Manor Castle seat, was "delighted" with the city's overall election results.
She said: "People have supported Labour despite a very difficult national picture. But we put out a local message about what we were doing for the city and I'm pleased the people of Sheffield have voted on local issues."
Coun Paul Scriven, leader of the Liberal Democrat group, claimed Labour had won because the main opposition vote was split between his party and the Greens.
The Green Party's performance was the talking point of the night, with their candidate Bernard Little ousting Liberal Democrat Moh-ammad Azim from Central ward.
And it also received hundreds of votes in other key battlegrounds, which Coun Scriven claimed had deprived the Liberal Democrats of victory over Labour in wards such as Hillsborough and Gleadless Valley.
He said: "The Greens have taken votes from across Sheffield and allowed Labour to stay in control. People voted Green and got Labour."
Coun Scriven added he was "very disappointed" over Mr Azim's defeat.
Both Coun Scriven and Coun Wilson condemned the BNP - which was the subject of a vocal protest from anti-Nazi campaigners who had gathered at the entrance to Ponds Forge, where the count was taking place.
A total of 99,962 people turned out to vote at polling stations in Sheffield yesterday - 34.5 per cent of the electorate.
The results mean Labour's position on Sheffield Council is unchanged with 44 councillors - a majority of four - while the Liberal Democrats are down one with 35 seats, the Green Party and Conservatives each have two seats, and there is one independent member.
Labour's performance was welcomed by Sheffield MPs.
Former Home Secretary David Blunkett, who represents Brightside, said: "I'm just extremely relieved that Sheffield has once again bucked the trend. Jan Wilson and her colleagues have been able to show that the agenda they are following has been the right one."
He added: "I'm pleased we've seen off the BNP, which ran a very vicious campaign."
Sports Minister and Central MP Richard Caborn said: "It's been a good night for Labour in Sheffield. This was a major target for the Liberal Democrats but they've made no advances. It's a big vote of confidence in Sheffield's local government."