The 26 year-old Wales international, who has made 53 appearances since arriving from Nottingham Forest two seasons ago, is now contracted until the summer of 2017.
Boss Mark Robins told the club's official website: "Joel will tell you that his best appearances have come in the blue and white stripes of Huddersfield Town, so everyone is delighted that we have come to an agreement to keep him at the club for the next three seasons at least.
"Quality left-sided defenders are very hard to come by and Joel will always be in high demand. His ability, combined with his flexibility to play in different roles within our systems, make him a highly valuable player in our squad.
"The most exciting aspect from my perspective is that I believe the best is still to come from Joel. He is still improving through our work on the training ground and on the pitch experience and that's a very exciting prospect."
Lynch added: "I could have run my previous contract down in the final year and assessed my options, but I feel like the club is going in the right direction and is well run and stable.
"Getting promoted to the Championship in 2012 wasn't the end goal - this club is only going to get bigger and better and I want to be a part of it."