The deal will see the classy midfielder remain atstadiummkuntil the summer of 2016.
Potter, 28, has been a virtual ever present since joining from Sheffield Wednesday ahead of the 2011/12 campaign, making 137 appearances for the Dons.
The former Liverpool man was also named the club’s Player of the Year in his first season.
“I’m over the moon,” Dons chief Karl Robinson told mkdons.com. “He’s been consistently one of our best performers over the past three seasons.
“Every team has an integral part of the group and I’m sure that the players would agree when I say that he’s huge for us and the development of our young players.
“The way Pottsy acts he’s about 40, but he’s at a really good age, a perfect age. If you look at peaking, the next two years should be the best of his career.
“He really enjoys Milton Keynes and that’s down to the connection he has with the city, the people and the fans which has obviously helped his decision.
“He could be out for the rest of the season with that Achilles injury but we know he’ll be 100% for the next campaign. He’s a unique character and I’m ecstatic to keep him because he was one of my first signings as a manager.”
Robinson added: “We’re in talks with one or two other players and I can’t see them being too far away now Darren has put pen to paper.
“This is the first of a number of exciting signings the club will be looking to make in the coming months. Now I need to find people to go and excite around him.”
An exclusive interview with Darren is available to view now on MK Dons Player - watch it for FREE with a two-week trial.