The 22-year-old has signed a one-year contract extension, keeping him at Tannadice until May 2013.
Goodwillie, who has scored 15 goals so far this season, had previously been linked with a move to Clydesdale Bank Premier League rivals Rangers.
Manager Peter Houston told the club's official website: "I am thrilled that David has agreed to extend his contract until 2013. To have secured his services until then is a major coup for the club.
"David has shown a terrific improvement in his overall game within the last 12 months as well as continuing to show the undoubted talent that he has always had and he is now recognised as one of the top strikers in the SPL.
"It is testament to the hard work, effort and enthusiasm of the staff that David sees his career advancing further here at Dundee United."
Source: PA
Source: PA