The 24-year-old's new deal will keep him at Leverkusen until June 2019.
The news is a potential blow to the Gunners, who had reportedly been eyeing up a January bid for the player.
Bender, the twin brother of Borussia Dortmund's Sven, said on the club website: "There has been a very positive development here at Bayer Leverkusen in the past few years.
"Our team is strong and has the potential to improve even further. I want to be part of that story and make my own contribution to ensuring we can become an obvious and permanent member of the leading group.
"I am absolutely committed to Bayer. I feel really good at this club and it's great fun playing here."
Leverkusen sporting director Rudi Voller added: "Our assessment of Lars four years ago was absolutely spot on when we signed him as a youngster from 1860 Munich.
"He has more than fulfilled our demanding expectations and he has proved to be a great bloke both on and off the pitch in the truest sense of the word.
"Lars is somebody who can lead the way. A team needs a character like him to be successful in football."
Bender has won 15 caps for Germany, scoring four times.