The new deal will keep the 32-year-old at Ibrox until the summer of 2013.
McCulloch had been linked with Blackpool and Ipswich Town in recent weeks.
“I know the club is trying to secure the players who are going to be out of contract next year and there are efforts being made to bring in new faces too,” McCulloch told the club’s official website.
“I want to be a part of things at Rangers and now I’m really looking forward to the season ahead. My extension offer came about very quickly and it was a no-brainer to sign.
“(Chief executive) Martin Bain and the gaffer asked me what I wanted to do and I told them I wanted to stay. It was nothing to do with money – I just wanted to be here trying to win trophies.
“Everything was done and dusted in a matter of minutes. I didn’t have to think about it and was delighted to stay.”
McCulloch added: “Obviously the gaffer is only here for another season then after that the plan is for Ally McCoist, Kenny McDowall and Ian Durrant to take over.
“It’s great that I’m going to be around too. Everyone here has made me feel really wanted and it is fantastic to be playing for such a great club.”
