The Wales international, 20, made his debut in the Good Friday derby defeat by Wigan, in which he scored his first of five tries in Super League.
He joined Saints from South Wales Scorpions in 2014, and was part of the unbeaten academy side in 2016.
"I have seen the raw potential Regan has," head coach Justin Holbrook said.
"He works hard in training and sets a strong example to the other younger players in the first team and academy."
Grace added: "This season has been a good one for me so far - I have made my debut in a derby and have played in some big games.
"I'm now looking forward to working hard, improving and doing the best I can for the Saints."
St Helens winger Regan Grace has signed a new two-and-a-half year contract, after making his first-team breakthrough in 2017.