The Costa Rica international has signed the deal after showing this season he is back to his best after an horrific double fracture of his leg two years ago.
"I am really happy to commit my future to Everton because this is a special club and, for me, a second home," said Oviedo, who joined from Copenhagen in the northern summer of 2012 and has kept Leighton Baines out of the side in the last two matches.
"When I experienced some really tough times, the toughest of my career, everybody was behind me - the manager, the staff, the players and the fans and that support helped me through and made me stronger, as a person and as a player.
"I feel that I am in the best moment of my career. I am experienced now and I have greater confidence and I have a real ambition to win a trophy for Everton.
"We have clear goals as a team. We want to win a cup and we want to continue building ourselves into a top Premier League team.
"The manager is clear that he wants to build a winning team and I want to play my part in this because he has helped me to progress my career by believing in me.
"Everton is an incredible club and the people here are fantastic. Every day is a joy to come to work and to try to improve as an individual and as a team.
"I'm really happy to be a part of this and my ambition is that we are successful in the years to come."