Guanyu, 23, has scored six points during his rookie season in F1 and his extension leaves only seats at Williams, Haas and Alpine to be filled before the 2023 grid is fully confirmed.
He stated: “There is more that I want to achieve in this sport and with the team, and the hard work we have put together since the start of the year is just the first step towards where we want to be next season.
“There is still a lot to learn, a lot to develop but I am confident in our work: I am looking forward to the next chapter of our story together.”
Team principal Fred Vasseur added: “From day one with the team, at the Abu Dhabi test last year, he has impressed me with his approach to work and this is always a very positive trait.
“We knew he was quick, but the way he adapted to Formula One in such a short time has been one of the best surprises of our season. He is a very nice guy, everyone in the team likes both his personality and attitude.
“He has had the humility to ask questions and learn, from the engineers as well as Valtteri, and the intelligence to apply all the information he got to improve race after race.”