McDonald played a key role in Fulham’s promotion-winning season and featured prominently in the club’s 23-game unbeaten streak.
Speaking to fulhamfctv, McDonald said: “Obviously I’m delighted. I feel settled here, it’s a great place to play, it’s got everything needed for a Premier League club, and thankfully that’s what we are.
“Hopefully we can kick on this season, it’s been a great couple of years and – having extended my contract – I couldn’t be happier.”
Club co-owner Tony Khan added: “Kevin’s presence within our squad and the positive effect he has on his teammates cannot be underestimated.
“Of course, Kevin made important contributions to our great success last season, so now it’s fitting that he will be contributing to our future successes as well! Come on Fulham!”