The defender, 22, has broken into the Magpies' first-team squad this season and he made his full Premier League debut in last weekend's Tyne-Wear derby clash with Sunderland.
Dummett spent last season on loan with St Mirren where he played 36 times to gain valuable first-team experience.
"I am delighted to secure my long-term future with Newcastle United," said Dummett on the club's official website.
"Like so many local lads it has been my boyhood dream to play for this club and now I am looking forward to repaying their faith in me and working hard to be the best possible player I can be.
"This is a great moment for my family and so many others who have supported me over the years, and I would like to thank them all."
Newcastle boss Alan Pardew said: "Paul fully deserves his new contract and we're delighted for him.
"He has been with us since the age of nine, progressing through our Academy which is great testament to the work they do in developing young players.
"It also demonstrates to youngsters in the region that a pathway exists for them - provided they have the right attitude, commitment and ability - to move through the ranks into the first team.
"He has made great progress in the last year, benefiting enormously from his spell at St Mirren last year. His performances this season for us have been first class and we were all delighted he scored his first goal for the club against Liverpool, and a very important one at that."