The 20-year-old full-back made 32 appearances for the Sky Blues this season, as they suffered relegation to League Two.
Academy product Kelly-Evans, whose twin brother Devon is also on City's books, signed his first deal in July 2014.
He helped the club win their first silverware in 30 years, coming off the bench in the EFL Trophy win over Oxford at Wembley.
After being relegated to the Football League basement for the first time since 1959, boss Mark Robins has already made six signings this summer.
Coventry City defender Dion Kelly-Evans has signed a new one-year contract.