"I am very happy and want to keep improving at Atletico," Partey told the club's website.
The 23-year-old joined Atletico in 2011 and made his breakthrough into the first team last season after loan spells at Mallorca and Almeria.
He has scored three goals in 31 appearances for Los Rojiblancos.
Partey was a member of the Ghana side that reached the semi-finals of the 2017 Africa Cup of Nations in Gabon.
Ghana midfielder Thomas Partey has tied his long-term future to Atletico Madrid by extending his contract with the Spanish giants to 2022.