The contract extension will now calm Chelsea's worries over the future of the striker who was entering the final year of his five-year contract.
Contract talks between the two parties have dragged since last year, raising concerns that Chelsea would need to agree a new contract with the 22-year-old this summer or risk being forced into a corner in negotiations.
Reports indicate that Abraham, Chelsea’s top scorer with 16 goals in 40 appearances, was also handed a pay rise to his previous £50,000 a week.
The Blues have in the recent weeks moved to tie down their flourishing academy graduates, handing long-term deals to Mason Mount, Reece James, Billy Gilmour, Callum Hudson-Odoi, Fikayo Tomori and Ruben Loftus-Cheek.
Manager Frank Lampard has in the past said Abraham, who could start when Chelsea visit Sheffield United on Saturday, remains a big part of Lampard’s plans despite the signing of Timo Werner from RB Leipzig.