The midfielder's previous deal had been due to expire at the end of the current campaign, but he has now tied himself to Turf Moor until the summer of 2015.
"We are absolutely delighted that Dean has signed an extended deal and it is another piece in the planning and preparation going forwards. People will be aware we are having to be prudent with our finances, but we also want to remain competitive and keep progressing the club," manager Sean Dyche told the club's official website.
"In his time at Turf Moor over the past couple of seasons, Dean has quite clearly shown that he wants to be competitive with us. His commitment is another sign that players want to be at Burnley and take us on this journey.
"We want to build something here and it was always in my thoughts to get Dean on a new deal. Equally, Dean has always intimated that he would like to sort something out and stay. The fact he was eager to do so speaks volumes."
Marney, 29, joined the Clarets from fellow Championship side Hull City in 2010.