The 32-year-old England midfielder has been a mainstay in the Toffees midfield, helping them to a sixth placed finish in the Barclays Premier League.
Osman has been at the club since he was an apprentice, making 284 league appearances.
Osman's previous deal was set to expire at the end of next season and he was delighted to extend his stay at Goodison Park.
Osman told evertontv: "I am delighted to have put my signature on another contract and secured another year at the club.
"I have been here since I left school, I am a player and a fan, I love coming to work every day and I am delighted that's going to continue."
The midfielder explained that uncertainty over Everton's next manager had not affected his desire to remain a Blue.
"We are not quite sure what's going to happen with a manager but I am still delighted to have secured my future here at the Club," he said.
"It's time to take the family on holiday now, enjoy it and recharge the batteries for next season."