The 30-year-old German midfielder had initially signed a short-term contract that was due to expire in January, but he will now stay on with the Toffees until the summer.
Thomas Hitzlsperger has committed himself to Everton until the end of the season, manager David Moyes confirmed on Friday.
The former Germany international joined the Toffees on a free transfer in October, going on to make seven first-team appearances. Hitzlsperger’s original short-term contract set to expire in January, but the midfielder has now agreed to extend his spell with Everton until the end of the season.
"Thomas wants to play, like everybody else," Moyes told reporters. "We've needed him and we will continue to need him with the games we have got in the second half of the season."
Moyes also revealed that retaining Hitzlsperger allowed the club to send promising youngster Ross Barkley out on loan to Leeds.
"I was thinking about letting Ross [Barkley] go out on loan and Thomas' experience allowed me to do that. I just felt that keeping him was important," Moyes said.