The Switzerland international has been a key part of Eddie Howe’s team this season.
The 30-year-old arrived on Tyneside from Spanish side Deportivo La Coruña in 2018. Since then he has made 98 appearances for the Magpies, scoring nine goals.
Schär has also amassed 69 international caps and will be fighting for a place in Switzerland’s squad at the FIFA World Cup in November.
Fabian Schär said: “I'm absolutely delighted. It’s what I always wanted - to stay here to play for this unbelievable club.
“Since my first day in Newcastle, I felt so comfortable. It’s like a second home and now to stay here for some more years, I’m delighted.”
The 'delighted' feeling was mutual with NUFC Head Coach Eddie Howe who is pleased Schär will be part of the club's future.
“I've been delighted with Fabian's form. He is the ultimate professional and a hugely important player in our dressing room.
"I'm delighted he has committed himself to the club. He is very driven for future success and I’m pleased he will be a part of our future.”