Cesar Azpilicueta has won every major club honour with Chelsea since joining from Marseille in 2012
The Spain right-back, 32, had a year left on his existing deal and had been in talks with Barcelona over a possible transfer this summer.
He joined Chelsea from Marseille in 2012 and has now made 476 appearances for the club, scoring 17 goals.
"I really feel the love and I am really excited for the new project we have in our hands," said Azpilicueta.
"I am really looking forward to continuing our adventure. I am a really proud captain and I hope we can share many good memories together."
Azpilicueta has won every major club honour with Chelsea, becoming one of just six players to have won the Premier League, FA Cup, League Cup, Champions League, Uefa Super Cup and Fifa Club World Cup.
His 13 cup final appearances are also a club record.
Todd Boehly, Chelsea's new chairman and co-owner, said: "We are thrilled with our captain showing his exemplary commitment and leadership yet again. There is still so much to do together."
-- Courtesy of BBC Sport