The 31-year-old made his Everton debut on January 12 2003 against Tottenham and has since established himself as a key member of David Moyes' side.
Moyes is a huge fan of Osman and he feels there is no one more deserving of a new deal at Goodison Park.
"We are giving him a new contract because he is such a valuable player to us," Moyes told the Daily Mirror.
"If he stays free of injury, he can go on for some years yet.
"There are different types of players coming into the Premier League now, and it is a far less physical place - and that helps. He could survive in the other style of football and have a career, but now he is thriving."
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