Schwarzer was strongly linked with a move to Arsenal over the summer and admitted he would be interested in a move to the Emirates Stadium.
“He was obviously very flattered by the interest,” said Fulham boss Mark Hughes.
“We’re delighted that he’s decided to stay here and we can move forward now.”
Hughes continued: “It’s something we’ve wanted to do for quite some time.
“I think Mark was keeping his options open and he had every right to do that.
“He’s very happy to sign.”
