Stopper was linked with Arsenal switch
The 38-year-old Australian, who joined the club from Middlesbrough in 2008, was heavily linked to Premier League rivals Arsenal during the last transfer window.
Schwarzer told Fulham's official website: "I’m delighted to have finally signed a contract extension with Fulham after a great deal of speculation surrounding my future in recent months. The club, manager and team have all highlighted their desire to see me stay at the Cottage and after successful negotiations I can confirm that my future is with Fulham.
"Since I joined the club in 2008 we have enjoyed a great deal of success and I believe Mark Hughes will build on this success over the forthcoming seasons and continue the club’s progress. I have enjoyed two memorable years at the Club so far and I am now looking forward to many more."
Fulham manager Mark Hughes added his thoughts: "I think it’s always been there. But we’ve obviously talked at length with Mark and made it quite clear that we want him to be here and thankfully that’s going to happen.
“He understood it was an opportunity and he wanted to investigate it. Mark was keeping his options open and he had every right to do that.
“It wasn’t possible to allow it to happen and we were in a position to do that. He was obviously very flattered, I think, by the interest.
“But he understands what we provide here. I think now it’s all concluded he’s absolutely happy and we can all move on.”