The Australia international, 29, joined the Eagles in the summer of 2011 from Turkish club Genclerbirligi and has gone on to make almost 100 appearances in a red and blue shirt.
"I'm ecstatic to put pen to paper on a new contract, I've been a part of this football club for two and a half years and I've enjoyed every moment of that," the midfielder told Palace's website.
"The first season was great and the second obviously ended in us getting promoted and now we're in the Premier League where we want to be, so I'm really happy here and pleased that I've done this."
The deal comes soon after new manager Tony Pulis took over in South London.
The duo's main goal is to lead the club to Premier League safety. They are currently bottom of the pile, six points adrift of 17th place.