The 35-year-old, who joined the R's on a free transfer in 2010, will now remain at Loftus Road until at least the summer of 2014.
He told the club's official website: "I'm absolutely delighted. It's changing times once again with Harry (Redknapp) coming in and I find myself playing more now than I did under Mark Hughes.
"I'm just so delighted to commit myself to the club for another year – I'm enjoying my football more than ever. The fans played a major role in this decision.
"When you're not in the side or even in the squad and you're questioning whether or not you should move on, it always stuck in my mind the many happy memories I've had here.
"Now I'm back in the side and I'm appreciated by the fans as much as I have been since I arrived here and that means so much - it feels like home here. I've come to the club at the latter stages of my career but without question, I've enjoyed the happiest time of my career at QPR."
Derry has made 91 appearances for the club.