The 35-year-old former England international says he feels "like part of the furniture" at the club who he joined in 2012 from then non-league Fleetwood.
He has scored 133 Premier League goals in 272 appearances including 24 in the 2015/16 season when under Claudio Ranieri they defied the traditional powerhouses to lift the league trophy.
"I'm obviously over the moon," said Vardy, who has scored 164 goals in 387 appearances in all competitions.
"Once I heard it was something the club was looking at, there was only one thing that was going to happen, and I was going to sign it. The decision was easy."
Vardy's contract was due to expire in 2023 and he had been linked with ailing giants Manchester United during the transfer window.
"I've been here long enough now that I feel like part of the furniture," said Vardy.
"My legs are still feeling great so I'll carry on helping the Club as much as I can, whether that's scoring or assisting, that's what I'm here to do."
Vardy -- who also enjoyed FA Cup success with Leicester in 2021 -- won the Premier League golden boot in 2019-20 with 23 goals and scored seven times in 26 appearances for England.
(For more sports news and updates, follow Ahram Online Sports on Twitter at @AO_Sports and on Facebook at AhramOnlineSports.)