Moyes has been at Everton since 2002, but has recently been linked with a number of other jobs, such as Spurs, Newcastle and even Manchester United.
However, this new deal, which has been under discussion for some weeks, has put all those rumours to bed.
Moyes said: "I'm delighted and extremely humbled to receive it. I'm ever so pleased. The opportunity to sign a second contract at Everton doesn't come around very often, whoever you are. I realise a big part in me getting this is because the players have performed so well.
Moyes signs new Everton contract
Bill Kenwright said: "I am thrilled that David has decided to pledge his future to Everton and am absolutely certain that Evertonians all over the world will be similarly excited. Since his arrival at Goodison Park, David has proved himself to be one of the most gifted young managers of his generation."
It is thought that the promise of new money to strengthen his squad was the deciding factor for Moyes, he is expected to have around £15m available to him in the January transfer window.
It is thought that the promise of new money to strengthen his squad was the deciding factor for Moyes, he is expected to have around £15m available to him in the January transfer window.