The midfielder has committed himself to St Mary's until 2014.
"I'm very happy at the club and I've enjoyed every minute of it since I arrived two years ago," Hammond told the Saints official website.
"It's a great club to be at and the ambition is there for everyone to see.
"We've started the season very well, we're top of the Championship at the moment so why would you want to be with any other club?"
Boss Nigel Adkins added: "Since I joined the club Dean has been top-drawer. He is the ultra professional so I am delighted he has signed a new deal."