The 31-year-old has put pen to paper on a new deal that will earn him around £55,000 a week.
Arsenal were known to be interested in signing the striker at one time, and Tottenham, Sunderland, Liverpool and Aston Villa also expressed an interest in him.
Saha: In action against Sunderland last week
Saha has enjoyed a new lease of life since joining Everton 17 months ago after an injury-ravaged spell at Manchester United.
He said: 'It was an easy decision. You always think carefully but it didn't take melong to know I wanted to stay because I have enjoyed my time here and I want tobe part of the future of Everton.
'It is a pleasure and an honour to stay here.
'At certain stages in your career you look at where you are going and by staying at Everton I feel I am going up in my career.'
New deal: Saha celebrates after scoring against Chelsea in December
Saha, the club's leading scorer this season with 13 goals from just20 starts, added on the club's website: 'I appreciate the way theEverton fans support the team and the way they support me all the time.
'It is a pleasure to be here and see the way the fans work for the team, they help all the players.
'It feels like a family and I really feel a part of it.'
Everton boss David Moyes never doubted the Frenchman would agree to stay.
'A lot of stupid nonsense has been written about Louis. We have always felt quite confident Louis would sign a new contract,' he said.
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