The 20-year-old enjoyed a fine first full season with the Toffees last term, impressing during the second half of the campaign in particular.
And the former Barnsley player has now committed his future to the Merseyside club, after spending part of the summer with Roy Hodgson’s England squad ahead of the World Cup.
Stones impressed with Everton last season
"I am over the moon," Stones told EvertonFC.com.
"It's just been such a great last season and to get pen-to-paper on a new deal is a dream come true.
"The last 12 months have been so enjoyable thanks to the faith that the manager has shown in me and all the players. What we achieved was unbelievable. It was a very memorable season and hopefully there's more to come."
It’s just over a year ago since Stones returned from the U20 World Cup with England, after which he moved into the Under-21s squad and became a regular fixture in Gareth Southgate’s team.
And it was his form there and with Everton which caught the eye of Hodgson, who named him in the standby squad for this summer’s trip to Brazil.
He won his first senior cap in the game with Peru at Wembley in May before travelling to Miami with the squad as they continued their World Cup preparations.
Stones joins Three Lions team-mate Ross Barkley in signing a new deal with Everton, after the midfielder signed a four-year contract last week.
"It is an important signing for the club and a really good reward for a young footballer with a fantastic future,” added Martinez.
"He had an excellent season in 2013-14 and it's really good news all round.
"It is very important that we continue to let our youngsters continue to develop into bigger roles."
