The Belgium international, who joined Palace five years ago for a club record fee, netted 10 goals from 30 league appearances in 2020/21.
The striker has also recently been called up to Belgium’s squad for the 2020 European Championships this summer, where he will be expecting to add to his 39 international caps and 16 goals.
After signing the extension, Benteke said: “I’m happy and proud to commit my future to Crystal Palace. Five years already and still a lot more to come.
"We have a great group of players and staff, and I’m looking forward to the season ahead and playing in front of our fans again.”
Chairman Steve Parish added: “Christian has been an integral part of consolidating our position as an established Premier League club over the last five years.
"He is an outstanding professional and has more than proven that he still has the quality and the hunger to perform for our club at the highest level, and I couldn’t be happier to see him in red and blue for another two seasons.”