The 31-year-old, who moved to Stamford Bridge from Barcelona in 2015, is now under contract until 2020.
“It is very good for me, I am really happy here in the club, with my teammates, the supporters and the club in general,” the Spanish international told Chelsea’s official website.
“It’s important for me to continue with Chelsea. I am comfortable here and want to win new titles and trophies. I want to help the team, score goals, and I repeat, I am really happy.”
Pedro has so far played in 131 games for the Blues, scoring 28 goals.
Club director Marina Granovskaia said: “We are very happy to secure Pedro’s services for another year.
“Since becoming a Chelsea player he has regularly demonstrated his quality on the field and we look forward to seeing him continue to flourish under the guidance of Maurizio Sarri.”
FA Cup winners Chelsea, under new manager Sarri, take on Premier League champions Manchester City in the Community Shield at Wembley on Sunday.
Download our app and read this and other great stories on the move. Available for Android and iOS.