The new deal will keep the 30-year-old midfielder tied to the League One club until the summer of 2019.
Rose is currently recovering from a broken leg suffered in the 3-1 home victory over Northampton Town at the end of December.
Assistant manager Joe Gallen told the official Pompey site: "It's great news for us and Danny that he's going to be here for next season.
"We've missed him in the team since he broke his leg and we're pleased that he's on the road to recovery.
"He's working hard in the gym and will hopefully be out running pretty soon and available for pre-season."
Rose joined Portsmouth in June 2016, playing a key role as the club won the League Two title last term, and has scored five goals in 59 appearances.