The 31-year-old, who joined United from Swansea City in August 2018, has been one of the Magpies' key performers this season, making 25 appearances and scoring twice in wins against West Ham United and Southampton.
He is now closing in on 50 appearances for Newcastle United and joins Jonjo Shelvey, Matt Ritchie and Martin Dúbravka in extending his stay at St. James' Park.
Steve Bruce said: "It's really good news to get Fede tied up. He has had a great season and richly deserves this recognition.
"He is a great professional. He trains and works incredibly hard for the team and he continues to be a positive influence around the place. We're delighted to have him."
Fernández began his career at Estudiantes de La Plata in his homeland, winning the Copa Libertadores, in 2009, before moving to Napoli, where he lifted the Coppa Italia in 2014.
The centre-back, who played for Argentina as they reached the 2014 World Cup final, then spent four years at Swansea before joining Newcastle on an initial two-year contract.
He told NUFC TV: "I'm very happy with the news - another year in the Premier League, with Newcastle. It's been a good time at the club, so when I spoke with the boss this morning and he told me the club wanted to do this, I told him that of course, for me and my family, it's good to know, and at this stage as well.
"Hopefully now we can push for the last few games to try to get more points, and I'm very happy about the news.
"To stay in the Premier League, to stay here and feel important, that for me is the main point - to be fit, try to help the club and try to push in every game I can play."