The new deal will keep the highly-rated goalkeeper at St Mary’s until the summer of 2014.
“I’m over the moon,” Davis told the club’s official website.
“I’ve never made it any secret that I want to play my football here and in the last five years I’ve had some interesting times.
“Certainly the last two years have been very positive, so to sign a new contract that keeps me going here means I’m delighted.”
“He has a lot of strengths, not only as a goalkeeper, but as club captain too, where his great leadership skills and personality come to the fore,” noted Southampton boss Nigel Adkins.