The winger is now tied to the Leeds until the end of the 2021-2022 season.
Hernandez initially arrived at Elland Road on loan from Al-Arabi in August 2016 before signing permanently the following January.
Named Leeds' Player of the Year in each of his two full seasons as a permanent member of the squad, Hernandez scored 12 goals and laid on the same number of assists last term.
His outstanding campaign was not enough to prevent Leeds from suffering agony in the play-offs, though, as they missed out on promotion.
Hernandez has scored two league goals and assisted as many this term, with Leeds again challenging for a return to the Premier League. Marcelo Bielsa's men are third in the Championship, two points behind leaders West Brom.