The 29-year-old midfielder has proved very popular since arriving at Selhurst Park in July 2011 from Turkish outfit Genclerbirligi and will now stay with the London club until June 2017.
The Australian international told the club's official website: "I'm ecstatic to put pen to paper on a new contract, I've been a part of this football club for two and a half years and I've enjoyed every moment of that.
"The first season was great and the second obviously ended in us getting promoted and now we're in the Premier League where we want to be, so I'm really happy here and pleased that I've done this."
Jedinak won Palace's player of the year award last season as they earned their place in the Barclays Premier League through the play-offs.
While their fortunes this term have been somewhat chastening - they lie bottom of the standings, six points adrift of safety - Jedinak penning a new deal is likely to appease the club's supporters.
He added: "I've built some strong relationships with players here and I've tried to make myself available to every player that comes through the gates and make them feel welcome and part of what we do.
"Everyone knows what we're about here and I have no doubts that we'll continue to push forward."