Despite the Blues failing spectacularly to defend their Premier League title, the Brazil international enjoyed a good season personally, scoring five goals and providing six assists in 35 top-flight appearances.
Willian's performances last term saw him voted the club's Player of the Year and Players' Player of the Year, which led to suggestions he might be reunited with Jose Mourinho at Manchester United.
However, the west Londoners had insisted from the start they were not interested in selling the 27-year-old attacker, who has now committed himself to a new deal until 2020.
"I'm very happy to sign a new contract with Chelsea. It's a dream to continue with this club and over the next four years I will try to help the team win more trophies," he told the club's official website.
"It's been an amazing time for me since I joined the club three years ago, I've won titles and last season I was named Chelsea Player of the Year. I hope to be able to stay at that level during the coming seasons and achieve more success."
Blues technical director Michael Emenalo added: "We are very pleased to agree a new long-term deal with Willian, who has proved himself to be an important player for the team since he arrived here.
"We are looking forward to seeing his continued impact as we begin an exciting new campaign under first-team head coach Antonio Conte."