The 19-year-old says he is focused on helping the Jambos back into the Scottish Premiership after signing the deal which will keep him at the Edinburgh club until at least the summer of 2017.
He told the club website: "The plans for the new season are exciting and being a Hearts fan, it wasn't really a hard decision.
"I didn't really hesitate to sign when the opportunity came along. I thought it was the best thing for me if I wanted to keep developing as a footballer. If I can get more first team games then that has to help my game.
"I am looking to keep improving and make a bigger impact on matches and add more goals to my game.
"I have signed for three years and am looking forward to working with Robbie Neilson again. I have been with him in the 20s and he certainly knows what he is talking about and his coaching is excellent."
Nicholson is still expecting big crowds to turn up for the upcoming campaign despite Premiership relegation with league derbies against city rivals Hibernian and clashes against Rangers guaranteed.
"It will be a big season for us all and I'm sure the fans will be right behind us again," he added. "They were incredible last season, even though it looked for a while that we were going to be relegated.
"We'll be fighting hard to get back in the Premiership. We'll all be focused on that as we want to get Hearts back to where we believe we belong."