The 19-year-old has signed a three-year deal to stay at the club until the summer of 2027.
The right-back, who has been with the Toffees since Under-12 level, was impressive for the Under-21s last term.
Speaking to club media: Dixon said: “I’m really pleased to sign this contract and I’m ready to go for next season. It’s been a big month for me, getting back into England again with my first games for the Under-20s and now signing this new deal. It means everything to commit my future here.
“I think my journey here so far has been great. Ups and downs but the downs make you stronger and the staff here have helped me through them to make me better. I can’t wait to keep improving with them and to see what else I can do next season.
“I know how passionate Evertonians are and how much this club means to people and I hope I can show them what I can do. It’s an exciting time to be here, with the new stadium coming, and it would be a dream come true to play there one day in the future.
“Next season I’d like to get some first-team experience, whether that’s here at Everton or going out on loan but that would be a good step for me.”