Manager Roberto Martinez had suggested in recent weeks that the England international would commit his future to the Merseyside outfit.
There were doubts over the 29-year-old's position at the club during last summer when Manchester United manager David Moyes made his interest known.
However, Baines has opted to continue his career with the Toffees by signing fresh terms on a four-year deal.
"It would be an understatement to say we are delighted to secure the best footballing years of Leighton Baines at our club," Martinez told the club's official website.
"It's a massive boost and exciting for the future. Leighton has just turned 29 and brings the right measure of maturity and football knowledge in a very specialised position on the pitch, bringing an infectious and positive influence to the rest of the squad.
"I know that every fan will be delighted with the news and we all share that excitement looking at what's left of this campaign and beyond."
The Kirkby-born full-back, who moved to Everton from Wigan Athletic in 2007, has racked up more than 260 appearances for the club.