The Potters boss revealed he had entered talks with the club over a new deal in January, with his existing contract due to run out in 2016.
Hughes has been at Stoke since May 2013 and has guided them to 10th in the Barclays Premier League this season.
Hughes told the club's official site: "I'm delighted to have signed a new contract
I think it's exciting times for Stoke City, everyone can see there's more progress to be made and we want to see how far we can take the club.
"I came here 18 or so months ago and it's gone as well as I could have hoped - we've certainly kept progressing which is vitally important from my point of view.
"This season has been more difficult than last season due to circumstances, like injuries to key players, but we've still been very competitive and I believe we can do even better next season with a little bit more investment
Let's see how far we can go."
Hughes, 51, guided the Potters to their first top 10 finish in the Barclays Premier League last season and could repeat the feat this year, although they have lost their last two games
And the former Wales and Manchester City manager is hoping securing his future will help the club.
He added: "Continuity is a huge thing in football, certainly in the Premier League, and hopefully the fact I've signed a new contract will give continuity to the club and, more importantly, the players because it helps them when they work with someone for a prolonged spell."
Ex-Manchester United and Chelsea striker Hughes replaced Tony Pulis in May 2013, having been sacked by QPR in November 2012, and has also managed Blackburn and Fulham
Stoke go to Chelsea next on April 4 after the international break.
Source : PA
Source: PA