The 23-year-old, who spent three months at loan at Bristol Rovers earlier in the season, will provide competition to first-choice stopper Mark Schwarzer next term.
"I'm delighted to have signed for another year at the club as it's been a special place for me since I joined," he told the club's official website.
"There's a fantastic set-up here for me to train and really hone my craft and, with Mark Schwarzer guiding me, I really couldn't ask for a better mentor or opportunity.
"I'd like to thank the chairman and, of course, all of the supporters who've encouraged me throughout my time here and I look forward to at least another year."
Etheridge joined Fulham in 2006.