The Dutch midfielder joined Palace in 2017 and has since made 56 appearances.
He enjoyed a particularly successful year in 2020, scooping Player of the Month on two occasions – January and October. The second of these came after scoring his first Premier League goal against Fulham in a 2-1 victory.
Crystal Palace Chairman Steve Parish said: “Jaïro is one of the most popular players at this club and I’m delighted we are able to announce his new contract on the back of his excellent away performance at Newcastle.
“Under the careful coaching of Roy and his team, Jaïro has developed immensely in his time with us, adapting to the physical nature of the Premier League and adding to his undoubted technical ability. I am delighted he has committed the next three years to the club and look forward to watching him continue playing for Crystal Palace.”
Reacting to the extension, Riedewald said: “I’m pleased to get it done, especially in such a time with everything going on in football, the world, the pandemic, I’m happy I can sign the contract and that the club has such trust in me for the future.
“I’m happy to have signed the contract so I can focus on football and helping the team.”