The 32-year-old, who captained the Toffees against Manchester City and made his England debut this season, has committed himself to the club despite David Moyes' departure
Osman started his career at Goodison Park and will be 34 when this new deal expires.
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"I am delighted to have put my signature on another contract and secured another year at the club," Osman told Everton TV.
"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."
And Osman was not deterred by the fact that the Toffees are managerless following David Moyes' departure to take over at Manchester United.
"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 added.