The 22-year-old, who is currently Roy Hodgson’s third-choice keeper for the upcoming European Qualifier against Lithuania and friendly with Italy, saw his previous deal expire in 2017.
But he is now tied to the club until 2019, despite failing to make a single appearance in the Premier League this season, playing five times in the cups for Stoke and six games on a loan spell at Derby last autumn.
Butland signed for Stoke for ??4m from Birmingham City in 2013 but has played second fiddle to USA international keeper Asmir Begovic.
He has made just nine appearances for the Potters overall, only three in the Premier League.
Butland, who began his career as a trainee at St Andrews, has also spent time on loan at Barnsley and Leeds, and has one senior England cap.
He is currently first choice under Gareth Southgate with England U21s, for whom he has 27 caps, and is set to play in their friendly against the Czech Republic next Friday.