The popular 33-year-old defender, named both the Players' Player and Supporters' Player of the Year last season, will remain at Loftus Road until the summer of 2013, with the option of a further year.
Hill said on www.qpr.co.uk: "I'm absolutely buzzing. As soon as I found out that Mark Hughes wanted to keep me for at least another year, staying here was the only thing on my mind.
"It was a straightforward decision to stay. I love playing here and I love playing at Loftus Road. It's a great ground."
