The 38-year-old has been a loyal servant to the Andalusian based club, and has already cemented his place as a club legend.
Joaquin, who is in his second spell at the club, made his professional debut for Real Betis in 2000 before leaving for Valencia in 2006.
He took in further spells at Malaga and Italian side Fiorentina before returning to Real Betis in 2015.
Joaquin became the oldest player ever to score a hattrick in La Liga when he scored three times inside the opening 20 minutes in a 3-2 win over Athletic Bilbao earlier in December.
"Real Betis Balompié and Captain Joaquín Sánchez have extended the contract existing between them. The winger, a Green and White icon, will continue in the Club until 2021," the club said in a statement.
"Joaquín arrived at Betis Academy aged 16 to become one of the main Spanish footballers in the last two decades. His great football, commitment and love for the Thirteen Stripes have created for him a special place in the Club's history. A legend that will continue growing with this contract extension," they added.
Joaquin, who has represented Spain 51 times and played at the 2002 and 2006 FIFA World Cups, expressed delight at his new deal.
"I still can go on for a while,” he said.
"I scored 21 goals and 23 assists in 156 matches over the last four years. I believe I'm in my best time."
"I should keep enjoying and making the Beticos happy. I landed here 23 years ago and I will be here for another year."
