The QPR midfielder's previous deal was up in the summer and he is now committed to the club for a further 18 months, four years on from his arrival on a free transfer.
Derry's Rangers career has been rejuvenated since Harry Redknapp replaced Mark Hughes as manager, and the 35-year-old has started four times in a current five-match unbeaten run.
He told the club's official website: "I'm absolutely delighted. It's changing times once again with Harry coming in and I find myself playing more now than I did under Mark Hughes.
"I'm just so delighted to commit myself to the club for another year - I'm enjoying my football more than ever.
"The fans played a major role in this decision. When you're not in the side or even in the squad and you're questioning whether or not you should move on, it always stuck in my mind the many happy memories I've had here.
"Now I'm back in the side and I'm appreciated by the fans as much as I have been since I arrived here and that means so much - it feels like home here."
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