The deal will keep the Spain international at Stamford Bridge until 2020, with the extension coming on the eve of what is expected to be his 200th appearance for the Blues.
Azpilicueta signed from Marseille in 2012 and has lifted the Premier League, EFL Cup and Europa League in his stint at the club.
The 27-year-old was also named as Chelsea's Players' Player of the Year for the 2013/14 campaign and it set to reach his landmark of 200 games when Antonio Conte's side travel to Sunderland on Wednesday night.
Azpilicueta has featured in every game under Conte since the Italian's arrival in the summer and said he was pleased to extend his stay in west London.
'I'm really happy to have signed a new contract," he told the club's official website.
"Since I arrived here my target was to progress as a player and win trophies
This new contract gives me the chance to continue my relationship with the club, that's what I wanted and obviously I'm really happy here.
'We've had some really good moments so far this season
From day one, we started working very hard.
"We have a new manager with new ideas and I'm really happy to be working with him
Obviously we can still improve but the long-term aim for us is to win trophies, that is what we all want, the players, manager and fans."
Source : PA
Source: PA