The USA international, who has been a mainstay in the Blues' starting XI since signing from Manchester United, is poised to remain at Goodison Park until 2018.
"It is fantastic news," manager Roberto Martinez told Everton TV. "To have Tim Howard performing as he has been this season, I cannot see past him to choose the best goalkeeper in the league.
"For him, in such an important year with the World Cup around the corner, to commit his future for the long term is an incredible moment for the dressing room."
Howard is currently ranked 22nd in Everton's all-time appearances list.