Hughes turned 18 on Wednesday, activating an agreement to prolong his deal by a further 12 months.
Rams boss Nigel Clough told the club's official website: "As we said earlier in the season when Will initially put pen to paper, we want to keep our best young players and he certainly falls into that category.
"It's brilliant news for all parties that he's got another year on his contract and he's the sort of lad you want to build your team around."
Hughes initially joined Derby on schoolboy forms in 2006 at the age of 11 before signing his first professional contract in March 2012.
The academy product has already become a key player for the Rams. He made 35 starts for Clough's side this season before suffering a groin injury in mid-February.
Hughes has not featured since but the npower Championship club have not ruled out the chance of the youngster returning to action before the end of the season.
Hughes became the second-youngest England Under-21 international behind Theo Walcott when he made his debut for Stuart Pearce's Young Lions as a substitute against Northern Ireland in November.