The 23-year-old was out of contract in the summer but has now extended his stay at Ibrox having signed a new deal this afternoon.
Hutton, a product of the Murray Park youth academy, has fully recovered from the injuries that reduced his playing time last term and will return to the training ground with the rest of the squad later this month to prepare for the 2014/15 Championship campaign.
He said: "I am absolutely delighted to sign a new deal with Rangers. You never want to leave a club like this so I am over the moon to agree a new contract.
"There are a lot of good midfield players at Rangers but I am confident in my ability and I will work hard to try and get a place in the team.
"It was frustrating to miss so much of last season through injury but I am fully fit and ready to play a part in our rise back to the top.
"I had a great pre-season in German last year and was feeling sharp but then I picked up an injury in training and that set me back. I have worked hard during the summer on my fitness though and I feel great so I can't wait to get started again.
"Next season is going to be an exciting one with Hearts and Hibs in the same division and they will be good games for the fans to look forward to.
"I have played in some great games for Rangers in my career, the highlight was against Manchester Utd in the Champions League, and I want to help the club get back to the highest levels of the game once again."