The new deal will keep the 39-year-old at Craven Cottage until at least the summer of 2013.
Schwarzer said: “I love playing and want to continue for as long as possible as long as the performances are there.
“I like to set myself targets and the 2014 World Cup is my goal without a doubt.
“I’m enjoying my football as much as ever and I try to maximise every opportunity I get. The saying I use is ‘I’ll be a long time retired’, so I want to do the best job I can.
“There’s plenty of time to feel tired when you’re retired – now is the time to enjoy it.”
Schwarzer added: “I realised a long time ago what a great life I have and you have to be realistic and realise how privileged we are to play football for a living, at this level in the Premier League.
“In my opinion it’s still the best league in the world. I look at Brad Friedel and he’s older than me so I’ll keep going as long as he’s going!
“He said to me he’s going to play for at least another two seasons so I’ve got at least that.”
