The 23-year-old has become a mainstay under French gaffer Claude Puel after initially struggling to command a starting berth.
He has made 10 appearances in all competitions this season.
The former Copenhagen star is currently undergoing rehabilitation to correct an ankle injury he suffered against West Ham in October.
Speaking to LCFC TV, Amartey said: “I am very happy to sign this contract at Leicester City. I am a simple and easy guy. I work hard and I focus. By God’s grace, my recovery is getting better and I have to be strong when I come back. I have to be ready, for the Club and for the manager.”
The Ghanaian has played almost 50 league games for Leicester since joining the club for £5m from FC Copenhagen in January 2016.
Amartey is currently sidelined, having suffered an ankle injury in the Foxes' Premier League clash with West Ham United at the end of October. Read also: Daniel Amartey vows to return stronger after horrific injury
He underwent surgery on the injury, and manager Claude Puel today issued an update on his recovery.
“Daniel improves. Now he can walk without any help. I think step by step he could run and we will see when he can come back with the squad," said the City boss.
The club announced Amartey's new three-and-a-half year deal this afternoon.
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