The striker’s Real future had been in doubt following the summer arrivals of big-money signings Toni Koos and James Rodriguez.
Top sides throughout Europe have been monitoring the France international’s availability, with Premier League clubs Arsenal and Liverpool thought to have been among his many admirers.
Benzema, 26, joined Real from Lyon in 2009 in a deal thought to be worth around 40million euros. Over the past five seasons he has scored 111 goals in 233 appearances for the club.
A regular feature in France's World Cup squad in Brazil last month, Benzema has scored 22 goals in 71 appearances for his country.
A brief statement from Madrid read: "Real Madrid announce the extension of the contract between the player Karim Benzema and the club until June 30, 2019, the next five seasons."