Etuhu was due to become a free agent at the end of the season and was reported to be a target for Liverpool following Javier Mascherano's departure.
But fears the Nigerian may depart when the transfer window reopens in January have now ended.
A statement issued by Fulham read: "We're delighted to confirm that Dickson Etuhu has signed a contract extension until the summer of 2014."
Etuhu has forged a strong central midfield partnership with Danny Murphy since his £1.5million arrival from Sunderland two years ago.
The duo's form was a key component in Fulham's passage to the Europa League final and the club were eager to keep a player described by former boss Hodgson as their "midfield destroyer".
The 28-year-old opened his account for the new season with a wonderfully-taken late equaliser in last month's 2-2 draw with Blackpool.