The 35-year-old originally joined the Chinese Super League outfit on a one-year deal from New York Red Bulls but on Thursday put pen to paper on an option to extend.
Cahill has been in vintage form in recent weeks and is Shenhua's leading goalscorer with 11 goals this season.
The all-time leading Socceroos scorer was again on the scoresheet on the weekend and provided an assist to help his club into the Chinese FA Cup Final.
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