The versatile defender joined Arsenal from Southampton in 2014 for $A27.16 million after breaking through as a teenager and impressing under Mauricio Pochettino.
Initially he made a good start to life at the Emirates Stadium, playing 23 times in his first Premier League campaign at the club – one more appearance than he managed at Southampton the previous year.
However, the emergence of Hector Bellerin coupled with injuries and poor form meant Chambers became a bit-part figure at the club and he was sent out on loan to Middlesbrough last season, where he managed 24 league appearances in a campaign that ended in relegation to the Championship.
Still only 22, Chambers has struggled with groin and thigh injuries this term, preventing him from making a single Premier League appearance for the Gunners - his only competitive outing coming in the EFL Cup win over Doncaster Rovers.
However, the England international will likely be boosted by this vote of confidence, which could see him remain at Arsenal for almost another four years.
Chambers took to Twitter to speak of his pride and desire to be a success at Arsenal, writing: "Proud to sign a new contract with Arsenal. I know I'm still a young player and I want to have my best years playing for this football club.
"I want to win as many trophies with Arsenal as possible. I'm going to repay the fans for the faith they've shown in me. Can't wait to get going again."