After a season of uncertainty over the midfielder's future, the Blues confirmed the England midfielder will remain at Stamford Bridge next season.
Lampard joined from West Ham in 2001 for £11million and has scored a club-record 203 goals in his 12 seasons in west London.
After months of speculation over whether he would stay or go, the deal for Lampard to continue at Chelsea for a 13th season was announced the morning after he captained the Blues in last night's Europa League final win over Benfica in Amsterdam.
Lampard, who will be 35 next month, said on www.chelseafc.com: "I'm absolutely delighted. Everybody knows I always maintained the dream was to stay at Chelsea.
"We've been talking for ages and even though it went on for quite a period it was always amicable.
"I want to thank Mr Abramovich [Chelsea owner Roman Abramovich] for everything he's done in making the dream a reality.
"I love this club, the staff, the players and especially the supporters, who have treated me fantastically since the day I arrived.
"The thought of helping the club to more success in the forthcoming years is all I ever wanted. I couldn't be happier."
It caps a stunning week for Lampard, who on Saturday scored twice in the Barclays Premier League win over Aston Villa to surpass Bobby Tambling's 43-year-old mark as Chelsea's record goalscorer.
The triumph in Holland saw Lampard - Chelsea's third-highest appearance maker with more than 600 to his name - claim the one club trophy missing from his collection.
Lampard had won the Champions League, the Premier League title on three occasions, the FA Cup four times and the League Cup twice prior to the Europa League triumph.
Chelsea chief executive Ron Gourlay said: "Frank has been an important player for Chelsea Football Club for a long time and has played a significant part in the club's success.
"We have been talking to him since the end of last year and our discussions have been entirely positive throughout.
"We are delighted we are now announcing an extension to his contract which will keep him at the club until 2014."
Lampard follows England left-back Ashley Cole in signing a contract extension and his stay will likely heighten speculation that former boss Jose Mourinho is in line for a return to Stamford Bridge.
Lampard blossomed under Mourinho, who is currently head coach of Real Madrid, and has praised the Portuguese as the world's leading manager in recent weeks.