The 20-year-old playmaker had been linked with a move to Manchester United after making his World Cup debut during the closing stages of the 2-1 defeat in Italy in Manaus.
He has earned nine caps for his country, and scored six times in 34 Premier League matches for his club last term.
The new contract will keep him at Goodison Park until 2018. Media reports claim it is worth £65,000 per week to the player.
"The good news is that Ross has signed a new contract with the club to reflect his new role," said Everton manager Roberto Martinez
"When we talk about assembling a squad for the new season, this is as big news as is it can get.
"He brings back memories of the big legends we had at the football club. Though he is still a young man. It is a four-year contract.
"We are desperately looking forward to the new season, and Ross is going to be a big part of our plans. We are waiting to finalise the squad, but this is a big moment to us."
Barkley said: "It is a dream signing a new contract with Everton. I didn't take much convincing.
"We want to push on, and get into the Champions League. We have our ambitions and goals. This is the club I love, and we have got to push on.
"I see Everton as my home...I don't think about anywhere else other than here as my home. I'm looking forward to the new season. We have strengthened the squad.
"The manager is a great man, and a great manager to the players...it is all about getting things right on the pitch. It has been great coming through the academy at Everton.
"It is a great club. I just go on the pitch, and hopefully do things right for Everton."
Barkley, who has had loan spells at Sheffield Wednesday and Leeds, was named on the shortlist for last season's PFA Young Player of the Year Award.
Martinez had said before the World Cup: "I always feel as manager you develop a relationship with players and you're always honest with that
"Ross is a phenomenal talent - probably the best English talent I have ever seen - but he is not the finished article yet.
"In football obviously you can never speak about the future. Obviously we need to come along and try to get into the top-four positions to offer players like Ross the next stage of their development."
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