The central defender, whose present deal at Leicester was due to expire after Thursday's match against Wolves, signed his extension this afternoon.
Keane has made six appearances for the Foxes since arriving at King Power Stadium last November.
And the 20-year-old has been ever present in Nigel Pearson's team since the start of 2013.
Leicester manager Pearson said: "I'm really pleased that Michael will be staying with us until the end of the season.
"It's been a steep learning curve for him, but he has done exceptionally well for us."
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