Vardy,33, the current deal at the King Power Stadium was due to expire in two years.
However, He has been rewarded with a one-year extension after finishing last season as the Premier League’s top scorer with 23 goals.
“It’s a special feeling to be able to commit my future to Leicester City once again,” Vardy said.
“I love playing my football in front of our fans at King Power Stadium and I’m delighted to continue this journey at such an exciting time for the club.
“We’ve a fantastic team that I believe is capable of getting even better and I can’t wait to see what we can achieve together in the next few years.”