The 23-year-old’s current deal was due to expire this summer but he will now be part of the squad for next season’s Scottish Championship campaign.
Hutton, who came through the youth ranks at Rangers, told the club’s official website: “I am absolutely delighted to sign a new deal with Rangers. You never want to leave a club like this so I am over the moon to agree a new contract.
“There are a lot of good midfield players at Rangers but I am confident in my ability and I will work hard to try and get a place in the team.
“It was frustrating to miss so much of last season through injury but I am fully fit and ready to play a part in our rise back to the top.
“Next season is going to be an exciting one with Hearts and Hibs in the same division and they will be good games for the fans to look forward to.”