The forward, who spent the second half of last season on loan at Burton, is currently with the England Under-21 squad at the European Championships in Poland.
He told the Fulham website: “It’s a nice feeling to be rewarded for going out on loan and doing quite well, then getting called up for the England U21s and coming to the Euros and to then have the club taking up that option, I am really pleased.
“The plan for me now is to hopefully break into the Fulham team and play more regularly than I have done in the past and really push on.”
📝 We are pleased to announce the Club has taken the option to extend Cauley Woodrow’s contract. 👏
— Fulham Football Club (@FulhamFC) June 23, 2017