The 26-year-old, who joined Swansea from Tottenham Hotspur in 2014, scored 11 league goals last season as he helped the Welsh club away from relegation trouble, eventually finishing 12th.
Sigurdsson was also part of the Iceland’s fairytale 2016 European Championship quarter-final run, making five appearances and scoring one goal in France.
The set-piece specialist had been linked with a potential move to Everton by the British media.
“The main reason (for signing the contract extension) is that I’m very happy playing football here. I feel very good and it’s a great team with a great bunch of lads,” he told the club’s website. (www.swanseacity.net)
“We had the Euros as well, of course, so I was away for five or six weeks, so it’s nice that it’s finally done and I can concentrate on football and get ready for the season.”
Swansea begin their league campaign with a trip to Turf Moor to face Burnley on Aug.13.
(Reporting by Nivedita Shankar in Bengaluru)
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