In the current campaign under Antonio Conte he has been an ever present as Chelsea stormed to the top of the table with a run of nine wins.
The 27-year-old signed from French side Marseille in 2012 and was a pivotal member of the team that won the 2015 league title.
Azpilicueta's new deal, which he signed on Tuesday, will tie him to Chelsea till 2020.
"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."
Azpilicueta, who was named Chelsea's Players' Player of the Year for the 2013/14 season, looks set to begin his new deal with his 200th appearance for the club in Wednesday's Premier League match with bottom side Sunderland.