Murphy joined the Cottagers from Tottenham in 2007 and when his new deal expires he will have been with Fulham for five years.
Staying on: Fulham captain Danny Murphy
The former Liverpool midfielder scored the goal that kept Fulham in the Premier League in 2008 and was made club captain the following season, leading the side to the Europa League final last year.
'I'm delighted to have signed a contract extension this morning,' he said.
'As a club we've achieved great things during my time at Fulham so far, not least our highest-ever league finish and reaching the Europa League final, and it is a great source of pride for me, as club captain, to have played a role in some truly historic moments for Fulham Football Club.
'We've made great progress, on and off the pitch over the past few years, and with the chairman's continued support, I believe we've got many more great years ahead of us.
'On Sunday we've got a massive game against Spurs in the FA Cup and as a team we will give our all tomorrow afternoon to earn a place in the Fifth Round. I'm sure it's going to be a great atmosphere at the Cottage and hopefully we can continue our impressive start to 2011.'
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