Having joined Chelsea in August 2012, the 27-year-old has so far played 199 times, scoring four times.
"I'm really happy to have signed a new contract. Since I arrived here my target was to progress as a player and win trophies.
"This new contract gives me the chance to continue my relationship with the club, that's what I wanted and obviously, I'm really happy here," Azpilicueta said in a statement.
Having been a regular at right-back, Azpilicueta switched to the left in late 2013 as he kept Ashley Cole out of the side, and his form in the 2014/15 season as a part of the country's meanest defense helped Chelsea to the English Premier League title.
This season there has been another change to position following club head coach Antonio Conte's switch of formation, with the Spanish international operating primarily as the right-sided defender in a back three. Chelsea are on top of the EPL so far.
"We've had some really good moments so far this season. From day one, we started working very hard. We have a new manager with new ideas and I'm really happy to be working with him," he said.
"Obviously we can still improve but the long-term aim for us is to win trophies, that is what we all want, the players, manager and fans.