The centre, who has just started the final season of his current deal, has played in 26 games for the club since joining last year.
The 24-year-old said in a statement: "I'm really settled here. The club has been great to me, and this has seen me develop my game and ultimately earn international recognition.
"We as players, speak a lot about how great the Gloucester fans are and, to play in front of the fine support we have as a club, is all you can ask for as a player.
"The team is still developing and the talent and potential here is great. So, I can't wait to see where we go and what we can achieve, and I couldn't imagine not being part of it."
Twelvetrees has earned five caps for England since making his debut against Scotland during this year's Six Nations.