The comedy-drama stars James Roday as Shawn Spencer, a young crime consultant who uses his heightened observational skills to pose as a psychic.
Roday and co-star Dulé Hill (Gus) confirmed the renewal news in an online video, released on the show's official Facebook page.
Former West Wing star Hill later added on Twitter that he is "extremely thankful" for USA's decision.
The Psych winter finale pulled in 3.03m viewers on December 14, up on the 3m who tuned in to the sixth season premiere in October.
Psych returns to USA on Wednesday, February 29 at 10/9c, with Saw star Cary Elwes appearing in the mid-season premiere.
Cheech Marin and Torchwood's Mekhi Phifer have also signed up for roles on the show.
The seventh season of Psych is expected to run for 16 episodes and will premiere in late 2012.
> Psych Maggie Lawson teases William Shatner role
Watch a promo for the return of Psych below: