With his deal expiring this week, the Holland fullback was expected to sign with Everton.
However, Tete has now committed to the Cottagers, penning a new deal to 2028.
The 29 year-old, who has been with Fulham since 2020, said: "I'm really happy to have signed, for myself and for my family, and I hope I can give more for the fans in these three years.
"After my first year I knew this was a family club, a really special club where I can develop. I want to be part of this group and hopefully we can push for more."
Cottagers chief Tony Khan added: “I’m thrilled to announce that we have agreed terms with Kenny Tete for him to stay at Fulham until at least 2028, which will make him one of our longest serving players.
“Under Marco’s great leadership, Kenny is an integral player in the team. We are all very keen for him to stay with us, and I’m pleased that is now a long term commitment, as we continue to prepare for another successful Premier League campaign."