It means the midfielder, 26, is under contract at Craven Cottage until 2021 and the club have an option to further extend the deal by another year.
There had been speculation about Cairney's future for several months.
Meanwhile, Fulham have signed defender Marcelo Djalo from Spanish second division side Club Deportivo Lugo on a three-year deal for an undisclosed fee.
The 23-year-old former Real Madrid youth player joined Juventus in 2014 but was loaned out three times and never made a first-team appearance.
He moved to Lugo last season and his Fulham deal includes a 12-month option.
"The truth is, for me it is a proud moment. It's a big club, an emblem of the city," Djalo told the club website.
Cairney's new deal is a major boost for the west London side and comes after he was linked with a move to the Premier League following Fulham's defeat in the play-offs in May.
The Scotland player was signed from Blackburn in 2015 and has been voted Fulham's player of the year twice in a row, and in March was named the EFL Player of the Year at the London Football Awards
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Tom Cairney has committed his future to Fulham by signing a one-year extension to his contract.