The extension will keep Giroud at the club for his third full season, having joined midway through the 2017-18 campaign from London rivals Arsenal.
“I am delighted to continue my journey and adventure at Chelsea,” Giroud said in a statement. “I can’t wait to get back to playing and enjoying competitive football with my team-mates. I’m looking forward to wearing the Chelsea shirt again, especially in front of our fans at a full Stamford Bridge, whenever it is safe to do so.”
Giroud had been linked with a departure for several months, with the striker nearly moving to Inter in January.
The move to extend Giroud’s contract will protect against losing the forward on a free transfer while also giving Chelsea a bit of stability in a market that is sure to be impacted by the coronavirus.
Giroud, who scored in Chelsea’s final game before the Premier League was suspended due to Covid-19, has featured 13 times this season, scoring three goals.
However, his role became more important in the opening weeks of 2020, with Giroud stepping in to replace the injured Tammy Abraham.
“Since I have been back at Chelsea, Olivier has been brilliant as a professional and as a man in general,” said manager Frank Lampard.
“He has great qualities to help the squad both on and off the pitch, not only with his talent but with the example he sets every day and the experience he brings to our young squad. I am very pleased that will continue next season.”
The 2018 World Cup winner has made a total of 76 appearances for the club during his stay, finding the back of the net 21 times.
During his Arsenal career, Giroud won three FA Cups and three Community Shields, and the France striker has already claimed an FA Cup and a Europa League title since joining the Blues.
Giroud scored Chelsea’s first of four goals against his former club in that Europa League final, which saw the Blues take down their London rivals Arsenal 4-1.
“It is clear to the club that Olivier continues to be a player we want in the squad, especially as we maintain the important balance between top-quality experience and the exciting young talent we have available, and his attitude when asked to play a supporting role has been exemplary,” said club director Marina Granovskaia.
“He is a proven trophy winner who we hope can help our new generation to become that too.”