The 33-year-old impressed on loan last season from Manchester City.
Speaking to evertontv, Barry said: "I was really keen to get this sorted before the lads come back to training on Thursday. I'm delighted now that everything is signed and I'm going to be spending the next few years at Everton.
"When you are on loan, it is never the same as being a signed player. I was really settled last year - but now I am an official Everton player and it feels really good.
"From the moment I signed last year I settled in straight away.
"There is a fantastic history here and it was brilliant working with the manager.
"I have learned so much from him, it is a great set of players and the fans were fantastic last year - just everything about Everton feels right. The training ground, the facilities, the history - there is so much that is positive about the club.
"In terms of a whole season, last season has to be one of my best - the performances the team put out, the club record points total in the Premier League, the big wins, there were so many positives. But that is last season. Now we try to improve on that and if we do improve then we are going to be going to some very good places."
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