The new deal sees Ruddy extend his commitment to the Norfolk club until 2017, with the Canaries having the option of extending the contract for a further year.
"I'm more than happy to commit my long-term future to the club," Ruddy said on canaries.co.uk.
"I've thoroughly enjoyed my time at Norwich City - everyone has been very supportive. The whole club, the players and staff I have worked with have been fantastic.
"I've broken into the England squad while at Norwich, and without the opportunity they gave me I wouldn't have been anywhere near it.
"I was in a bit of a no-man's land before I joined the club, and they took a gamble on me.
"Thankfully I think it's paid off for both sides and now I'm just looking to keep up my form."
Ruddy, 27, joined Norwich from Everton in the summer of 2010 and has gone on to make 107 appearances in all competitions for the club.
His sole appearance for his country so far came in August 2012, when he featured in a friendly against Italy.
City boss Chris Hughton added: "We were in a position where there was some interest in him in the summer, and I think that reiterated for us what we felt about John.
"We're really delighted that he has signed a new contract, and it's one that's thoroughly deserved not only for what he's done for the club but of course with his part on the international scene with England too."
The deal for Ruddy marks a high point in an otherwise difficult period for Hughton.
All-action midfielder Alex Tettey has been ruled out for several weeks with suspected ankle ligament damage and may need an operation.
Striker Ricky van Wolfswinkel, the club's record signing, is an absentee this weekend for the daunting trip to Manchester City with a troublesome foot injury, while Robert Snodgrass is also a major doubt after suffering concussion in the Capital One Cup defeat against Manchester United.
On top of that Norwich have been charged by the FA, along with Cardiff, with failing to control their players following the melee sparked by midfielder Leroy Fer's controversial disallowed goal in last weekend's 0-0 Premier League draw.
All Hughton's focus on Saturday, however, will surround trying to break out of the bottom three as he heads to the Etihad Stadium without Tettey, who was injured in a stoppage-time collision with Cardiff's Fraizer Campbell.
Hughton said: "Alex took a whack to an area just above his ankle and it is still very sore.
"We'll find out perhaps over the next couple of days how serious it is likely to be, but the indication is that we do not expect it to be for a short time.
"We're talking several weeks. Whether or not he requires surgery is also something we need to assess. We know the type of player Alex is and he was doing that role very, very well. It's a big blow for us and for the lad."
Van Wolfswinkel's injury is less concerning but with goals hard to come by, just six all season so far, it still gives Hughton a headache.
"Ricky is not in contention (for Manchester City)," said Hughton. "We hope he will be in contention next weekend. The good thing is it is not a serious injury, we just have to treat it carefully."
Midfielder Nathan Redmond is also recovering from a hip injury and while he and Snodgrass, who was knocked out following an horrific collision with Rafael against United, have returned to light training both face late fitness tests.
Hughton said: "We'll see how he (Snodgrass) is the next couple of days. The good news is that he was released from hospital the same evening and travelled back to Norwich the day after.
"We now have to monitor how he reacts. The X-rays came back all clear. It was always a concern when you have a clash like that. It is really about the symptoms and whether he has any headaches or dizziness. He would be a doubt and so would Nathan.
"It's just a muscle injury in his hip, which is quite an unusual one, but you can't continue with it. He came off at the right time and it is really how quickly it settles down."