Hodson’s current contract was set to expire in June and he will now stay with the Dons until at least 2017.
The 23-year-old told the club’s official website: “There were a number of reasons why I wanted to stay – there’s a good bunch of lads here, the manager is great and the fans have always been good to me.
“It’s a chance to play Championship football again. I’m sure every player at the club wanted to take that next step up to this level and I’m no different. I’m really looking forward to next season.
“Last year wasn’t great because of the injuries but now, with this new deal, I can work to get back as fit as possible and give it a right go.”
The Northern Ireland international has made 43 appearances for the Dons since joining in the summer of 2013 from Watford, for whom he gained Championship experience having featured on 83 occasions.