Guaita has the option to extend the deal for another year when it comes to an end.
The 34-year-old Spaniard’s previous contract would have expired at the end of this season and had been linked with a move to Real Sociedad.
Guaita joined the Eagles from Getafe in the summer of 2018 and has made 80 appearances in his time at Selhurst Park, keeping 24 clean sheets.
"I am so happy to extend my time at Crystal Palace with my contract until 2023," Guaita told the club's website.
“My family is really settled here in south London, and I have enjoyed my time with (manager) Roy (Hodgson), Deano (goalkeeping coach Dean Kiely), all the coaches, and my team-mates playing in the Premier League, and have a great relationship with the fans of Crystal Palace.”
Chairman Steve Parish added: "I am delighted that Vicente has committed his future to Crystal Palace.
"He is an extremely talented goalkeeper whose contribution has been invaluable over the last few seasons and I am sure will continue to be so in the upcoming months and years."
Guaita has played in all 21 Premier League games for Crystal Palace this season, with the Eagles occupying 13th position on the table.
