The 22-year-old made 10 appearances for the Toffees last season and went on to start all three matches for Gareth Southgate’s Young Lions at the European Championship last month.
"It's an honour to commit my long-term future to Everton," Garbutt told EvertonFC.com.
"I've been made to feel very welcome at the club since I signed my scholarship six years ago.
"Over the years, I have grown to have an affinity with the club and I feel a sense of belonging here.
Luke Garbutt featured in all three of England's games at the Euros
"Under the manager [Roberto Martinez], the future looks bright and positive and I want to be a part of that. It is a great club to be a part of and the staff and supporters have been great with me from day one.”
Having gained his first taste of senior action in the last campaign, the left-back is hoping to push Leighton Baines all the way for his first-team spot this season.
"Last season was great for me in continuing my development, my personal highlight being the Europa League adventure as I gained a lot of experience in those games playing against top-quality opposition,” he added.
"Everything we went through last season and the experience we gained as a group will only make us stronger as a team ahead of the new season."
