Schwarzer's previous terms were due to expire this summer and Fulham have moved to prolong his stay in West London until the end of the 2012-13 season.
The Australia international, 39, joined the Cottagers on a free transfer from Middlesbrough in 2008 and has since proved a valuable asset to the team, making 121 Premier League appearances to date.
"I love playing and want to continue for as long as possible as long as the performances are there," Schwarzer told Fulham's official website. "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.
"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."
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