The Nigeria international was reportedly a target for Crystal Palace in January, with his previous contract set to expire at the end of the season but has now committed himself to the KC Stadium until 2016.
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"I'm happy to extend my stay here," Aluko told the club's official website. "I've said right from the beginning, when talk about a new deal first came about, that I was happy here.
"I also said that it might take time for the deal to happen and that is how it turned out.
"Because it took a while, people started making a story out of it and were saying that I was going to this place or that place. That was always irrelevant.
"I have to thank the manager and the owners of the club.
"I would also like to thank my team-mates for helping to make my time here a success. If it wasn't for them, there probably wouldn't be a new deal."
Aluko is currently sidelined with an Achilles injury and has made just eight appearances this season, scoring once in September’s 3-2 win at Newcastle United.