The 19-year-old central defender has been with the SPL club since last August.
During that time the Scotland under-21 international has made a total of 15 appearances.
The Well, who are managed by Stuart McCall, are currently riding high in third place in the SPL behind Celtic and Inverness.
Speaking about the decision to keep Kerr on, McCall told Motherwell's official website
:“I am pleased to get Fraser here for another few months; he will provide good competition for the lads at the back – particularly with Steven Saunders returning to the fold too.
“He’s young and still learning the game and we’ve asked him to fill in all over the place and he has done well for himself.
“He was excellent against Georgios Samaras at Celtic Park during the week; his recovery pace is vital in games like that.
“If we want to finish in the top six and push for European places, then everyone will have a role to play and Fraser will be a big part in that.”