Terms of the deal, which starts in 2014, weren't released, but The Boston Globe reported Pedtroia -- the American League Most Valuable Player in 2008 and Rookie of the Year in 2007 -- received $100 million.
Pedroia is hitting .306 with six homers and 58 RBI in 101 games this season.
He has a .303 average with 96 homers and 467 RBI for his career.
"Dustin's numbers are great, but they don't tell you how committed he is to winning," said Red Sox Manager John Farrell. "Watch him every day, on the field and in the clubhouse, and you see exceptional skill and passion. His teammates will tell you: he's a winner, a winner who loves the Red Sox and a winner who loves Boston."
The Red Sox began play Wednesday with a 61-41 record, 1 1/2 games ahead of second-place Tampa Bay in the AL East.