Lilley, 20, made his first-grade breakthrough at Headingley in 2015 and was a regular last season with three tries in 24 appearances.
He has played three games for the Rhinos this season around a loan spell at Championship side Bradford Bulls.
"When I was growing up it was where I always wanted to play," Lilley said.
"The last couple of years have been a big learning experience for me. I have learned new things, especially over at Bradford where I have had more of a leadership role, and that has taught me what I need to improve in my personal game too."
Head coach Brian McDermott added: "Jordan has worked hard at Bradford this season with [former Australia half-back and Bulls coach] Geoff Toovey and developed his game this season.
"He is still only 20 years old so there is a long way to go in his career but if he continues to apply himself, the opportunities will be there for him."
Half-back Jordan Lilley has signed a new three-year contract with boyhood club Leeds Rhinos that expires at the end of the 2020 Super League season.