The Republic of Ireland Under-21 international first joined Everton in November 2008 but he did not made his Premier League debut until January 2012 after being recalled from a loan spell with Scunthorpe.
He has made eight appearances for the Toffees and was part of the team who thrashed Leyton Orient in the Capital One Cup victory last month.
The new three-year contract will see Duffy remain at Goodison Park until 2015 and he is looking forward to establishing himself in the first-team.
“I’m delighted to get it done. It’s taken a bit of time to get it sorted but I am happy now,” he told evertonfc.com.
“I have been here for a while now and loved every minute of it.
“Now this is sorted I can focus on working hard and continuing to improve.”
Duffy has yet to represent the Republic of Ireland at senior level but he has caps at both Under-19 and Under-21 level.
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