The news, on the eve of the 2007/08 Guinness Premiership season, is of vast significance to Dean Ryan's squad as he attempts to build on last season's appearance in the Guinness Premiership final.
Hazell, who already had a year to run on his existing deal, is a talismanic figure at Kingsholm and will begin his 10th season with the club when Gloucester open their new campaign against Leeds next month.
"I have been very proud and privileged to have had the opportunity to represent my home-town club for so long and I am thrilled to have this chance to be involved in one of the most exciting times in Gloucester's history," Hazell told www.gloucesterrugby.co.uk
"As a youngster growing up in the city, all I wanted to do was wear a Gloucester shirt - there is nothing like playing in front of a full and packed Kingsholm - so to know I can still do that is fantastic for me and my family.
"We are building something tremendously exciting at the club on and off the field I cannot wait to be a part of it again when the season starts. I think the signings that have been made by Dean Ryan show exactly where he wants the club to be and I am very excited about that prospect.
"There is competition for places, there is a real togetherness in the squad and the progression of the club is something we all want to be involved in."
The 29-year-old, who has won seven England caps, made his Gloucester debut in the 1997/98 season and has since made 167 appearances in all competitions and is now Gloucester's longest serving player.
His relentless style and commitment were key components in Gloucester's assault on Twickenham last season and head coach Ryan added:
"I think we are very fortunate to have a guy like Andy Hazell at the club - he is a fantastically dedicated, determined servant of Gloucester and to retain his services is great for us.
"A number of times last season I said we were not the same side when the likes of Andy Hazell was not involved and I think that just underlines his value to us.
"We made significant progress last season and much of that was down to Andy and his level of performance week in, week out. I hope he can get better and help Gloucester achieve even greater things."
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