The new deal will keep the 29-year-old defender at Selhurst Park until the summer of 2015.
McCarthy said: “I’m delighted; it was something that myself, the manager and the chairman have been talking about for some time so it’s great to have it sorted.
“I thought we made good progression last year and speaking to the manager I know we’re going to push on again this season.
“Everything’s positive about the place, I’m very happy here and have a great relationship with everybody at the club.”
