The Spaniard's contract extension ended immediate speculation about his future and means the sport's oldest active driver will race on past his 46th birthday next July.
Lance Stroll, son of team owner Lawrence Stroll, will continue to partner Alonso for the fifth year in a row.
"I took my time to make this decision, but racing is my life, my passion, and I know I still have the speed and determination to compete at the highest level," Alonso said in a team statement.
"I’m committed for the long term with this team and to helping us succeed. I truly believe in what we are building: we have strong leadership, incredible people, partners and facilities."
Alonso, who won his titles with Renault in 2005 and 2006, joined Aston Martin in 2023 and has taken eight podiums and two second-place finishes with them.
This season has been a struggle, however, with the Silverstone-based team having an uncompetitive car and Honda power unit. They have scored just three points in 15 rounds, all from Alonso, and are 10th of 11.
Alonso had been evaluating his position, saying in August that he would consider other positions at the team if they saw greater value in that, but he also had other challenges in mind such as the Dakar Rally or to have another go at the Indianapolis 500.
"Age is not a problem. It's just the motivation, the fun, what remains to be achieved," he said.
Lawrence Stroll said having two experienced drivers was of great value to a team with title ambitions.
"We are here to win, and whilst our short-term focus remains on improving performance, I believe we have the world-class talent we need to achieve our long-term objectives,” said the Canadian, whose son has been at Aston Martin since 2019 but has yet to win a race.