The 32-year-old right-back from Spain was negotiating with Barcelona about a potential move this summer. He still has one year remaining on his current contract.
He moved to Chelsea from Marseille in 2012, and since then, he’s made 476 appearances and 17 goals for the team.
Azpilicueta said, “I feel the affection, and I am incredibly enthusiastic about the new initiative we have in front of us.
“I am really excited to get on with our journey. I hope we can make a lot of happy experiences together since I am a very proud captain.”
Azpilicueta joined just six players in having won the Premier League, FA Cup, League Cup, Champions League, Uefa Super Cup, and Fifa Club World Cup with Chelsea.
His 13 appearances in the cup finals are a club record as well.
Chelsea’s new co-owner and chairman, Todd Boehly, said: “We are happy that our captain has once again shown his exceptional devotion and leadership. We still have a tonne of work to do together.”