The 30-year-old midfielder has made 117 appearances for the Tayside club across two spells, first arriving at United in 2013.
The former Burton, Millwall and Mansfield player's latest deal sees him contracted until 2023 with the option of a further year.
Speaking to DUTV, Butcher said: "When the club came to me and said they wanted to extend my contract it was something I wanted to do straight away.
"I love it here and this is home to me now. There is still a lot I want to achieve with Dundee United.
"I've got really good relationships around the club with staff members, my teammates, the gaffer (Tam Courts), Tony Asghar ( sporting director) and the chairman (Mark Ogren), and that all means a lot to me.
"When you got out and cross that white line you want to do well for those people, and the support we have has been great and I want that to continue.
"You don't want to talk about it too much because it's just words and you have to put it into action but there is still a hell of a lot I want to achieve at this club.
"Dundee United should be finishing in the top six and competing for trophies - we just missed out on that last season.
"Hopefully, this new deal gives me the time to do that because I feel my best football is still to come."
Head Coach Courts said: "Calum has been a key part of, not just the team, but the entire club for the last few years and I'm delighted that we've been able to secure a player of his quality for the prime years of his career.
"His qualities as a leader made my transition to head coach even easier and I see him continue to be a dominant player for us moving forward in what should be his best years."