The United States forward moved to the Pro12 side from Leicester Tigers in the summer of 2015.
The 25-year-old is currently recovering from shoulder surgery and is expected to return early in the New Year.
"Greg has worked really hard and has fitted in well in our environment," said head coach Gregor Townsend.
"It's great news that he's staying for another couple of years to compete with the other second rows at the club."
Peterson, who has 13 international caps, has made 19 appearances for the Warriors, including 10 starts and two tries.
"I've enjoyed my 18 months in Glasgow," he told the club website. "The club, the supporters and the community have been great to me and I'm really happy to be staying."
Greg Peterson has signed a new two-year contract with Glasgow Warriors that will keep the second row at Scotstoun until at least May 2019.