The 28-year-old left-back's previous deal was due to expire in 2022, thus the extension seemingly secures his value to Ajax for a further season.
However, media reports suggest the contract includes a clause that will allow the defender to leave the club next year should a major foreign side show an interest.
Tagliafico has been linked with a host of big clubs in recent years, including Manchester United, Inter Milan, Atletico Madrid, Chelsea and Manchester City.
Hakim Ziyech, now at Chelsea, was said to have had a similar agreement written into his contract before he left Ajax for Stamford Bridge earlier this year.
Tagliafico joined Ajax in January 2018 from Argentina's Independiente and helped it to reach the UEFA Champions League semi-finals against the odds in his first full season.
Since the start of that campaign, 2018-2019, only five defenders have featured more regularly in Europe's premier club competition than Tagliafico (21), while Juan Bernat and Raphael Guerreiro (five each) are the only two to have more goals than the Ajax defender (four).
But he has also proven himself shrewd defensively.
His total of 39 successful tackles is second only to team-mate Noussair Mazraoui (40), while Mats Hummels (50) is the sole defender with more than Tagliafico's 45 interceptions.
The Argentina international comes out on top for overall duels (286) and duels won (165), however, highlighting the fearlessness Ajax would lose if he were to leave.
Nevertheless, Saturday's (AEDT) news should at least ensure Ajax secures a healthy profit if he does depart in 2021.