The 30-year-old, who joined the Clarets in 2013 following his release from Wigan, will spend the next two seasons at Turf Moor.
Jones was a key figure in Burnley’s Premier League campaign, making 38 appearances and boss Sean Dyche again sees him as a vital cog in their attempt to get back to the top tier.
The midfielder told the club’s official website: “I have thoroughly enjoyed my time at Burnley. I think the club is moving forwards and I’m looking forward to another big season for the club.
“I’ve really enjoyed working with the manager, players and staff at the club and life, on and off the pitch, has been good for me here, so it was important for me to extend my stay.
“I feel in the last two seasons I have had a decent run in the side. Obviously as a player I want to be playing and we will have more competition for places this year, but hopefully I can be in the team and have another push to get the team back in the Premier League.
“I’ve been here two years and the club is definitely moving forwards. The manager has put in place good foundations and you sense, with Scott (Arfield) and Tom (Heaton) signing new deals, that we all enjoy it here and want to move forward with the club.
“They are two players who have played virtually every game in the last two seasons and their motivation will be the same as mine; to get back in the Premier League with Burnley.”