Berahino,who has burst on to the scene this season with six goals in 10 matches for Albion, put pen to paper on the contract at the club's training ground on Monday, so ending months of speculation.
The 20-year-old striker, who grabbed the winner in a 2-1 victory over Manchester United at Old Trafford in September, has also bagged six goals in four games for the England Under-21s.
West Brom head coach Steve Clarke announced last Thursday Berahino was due to commit himself to Albion "within the next 24 hours".
Clarke conceded to being hopeless at making predictions, but there has been only a slightly extended wait for the confirmation that should end rumours regarding Berahino's future.
Although he has been with the club since the age of 11 after being spotted by academy staff, Berahino burst on to the scene at the start of the season and has not looked back.
Sporting and technical director Richard Garlick said: "It was always our intention to reward Saido for the huge strides he has made over the past few months.
"To be able to reward one of our proteges, who has worked his way up through the ranks from the age of 11, is a great moment for the club.
"It's a fantastic story for us and especially for our hard-working academy staff, who have played a fundamental role in his development over the years.
"Producing one or two players who can supplement the first team is something we want to achieve every year.
"We hope this is the start of that process as we feel we have a number of other young, exciting players coming through."
Garlick is hoping Berahino will serve as "an inspiration" to those players involved in the club's youth set-up.
Berahino has been warned, however, not to get carried away with the limelight he has suddenly found himself under this season.
Speaking to the club's official website, Garlick added: "It's difficult for any 20-year-old to get into a Premier League side and there are going to be times when Saido may not be playing as much as he would like to.
"He's not the finished article and he has to remain patient, as we do with him.
"But he has done exceptionally well to get where he is and he now has to focus on what got him here - hard work and keeping his feet on the ground."