Ramsdale has made 76 appearances across all competitions since joining the Gunners from Sheffield United in the summer of 2021.
He has kept 13 clean sheets in 36 Premier League games for Arsenal this season to help Mikel Arteta's side mount a significant title challenge for large parts of the campaign.
Ramsdale's new deal will take him through to the summer of 2026 with the option to extend for a further year.
"[There's a] family feel to the football club," said Ramsdale in a message to the Arsenal fans after signing his contract.
"I can't imagine anywhere else for my home stadium to be, or my home.
"I feel honoured that you guys have welcomed me in and I feel honoured that the staff want me to stay. So it was the easiest decision in the world for me to commit my future to the Arsenal.
"So let's keep moving forward as a club and make more special memories."
Arsenal manager Mikel Arteta added: "We're all so happy that Aaron has signed a new contract. The way Aaron has developed over the past two years has been exceptional, with his performances, contribution and overall adaptation to the club.
"It's great that we're continuing to build our future with our biggest talents in our young squad. We're all looking forward to enjoying many more years of Aaron the player and the person at the football club."
Arsenal have qualified to play in the Champions League for the first time since the 2016/2017 season.
