The 24-year-old Isreali international midfielder joined the Hoops from FC Ashdod in 2013 and has established himself as a mainstay of the team.
He said: “I have a great relationship with the manager and the backroom staff at Celtic.
Bitton, capped 16 times, endured a difficult start to his career in Scotland after being brought to the club by former manager Neil Lennon, but the arrival of Ronny Deila in the summer of 2014 signalled an upturn in the player’s performances.
He has won two Premiership titles and a League Cup and admits the decision to agree to a new deal was an easy one.
He added: “As soon as I got a new offer from Celtic, I had no questions about signing.
“It’s a huge club, the best fans in the world and Celtic Park is one of the best stages in Europe, so I’m just delighted to extend my stay here.”