Oxley is highly-regarded within the corridors of power at the KC Stadium after joining the club from Rotherham in the summer of 2008.
The 22-year-old made his debut last Janaury when he came on as a substitute against Sheffield Wednesday and he is tipped for a big future.
Tigers boss Steve Bruce has now moved to secure Oxley's long-term future with the keeper penning a two-year deal.
The athletic youngster has enjoyed spells out on loan at Walsall, Grimsby and Burton during the last few seasons.
Hull are thought to be looking to loan him again next season so that he can play regular first-team football and continue his development.