"It didn't take me long to decide to sign," Essien told the club's official website on Monday.
"I am really happy because I came here to stay a long time; I work really hard and do everything to succeed, I have the ambition to win a lot of trophies."
Essien has been an excellent versatile player for his Portuguese manager Jose Mourinho, who installed him in different positions to cover injured teammates.
Chelsea chief executive Peter Kenyon has expressed his pleasure with the contract extension.
"He is recognized as one of the new gems to have joined the Premiership. He enjoys London and is settled," he declared.
Kenyon brought the defensive midfielder to Stamford Bridge from French champions Olympique Lyon in 2005 for a fee of 46.3 million dollars to become Africa's most expensive player.
"We spent a summer getting him, it wasn't easy, we are delighted to have him," he affirmed.