Albion manager Gary Rowett is quoted as saying on the club's official website: "We're really pleased to extend Callum's loan with us until the end of the season.
"We've had a good look at him in the month he's been here and we were keen to keep him for the season.
"He's shown great quality since coming in and he's a versatile player. We hope he can continue to make an impact for the rest of the season."
McFadzean has also spent time on loan at Chesterfield.