The Swede, who joined the club from Rosenborg in 2012, was due to be out of contract in the summer.
Announcing the deal on their official website, Celtic said Lustig has become "an integral part of the team's success over the past few seasons".
The Sweden international, 30, has won four league titles, one Scottish Cup and two League Cups with Celtic.
He has made more than 150 club appearances since moving to Glasgow and been capped by his country 55 times.
Celtic defender Mikael Lustig has signed a contract extension to keep him at the club until May 2019.