The Frenchman joined the Black Cats on loan in January 2025 in a bid to aid their push for promotion from the Championship.
Le Fee played a starring role with two assists in their play-off campaign to secure a return to Premier League football, also triggering a permanent deal in the process.
He bagged five goals and six assists in the top flight last season, and has already netted twice this campaign as Sunderland embark on their first-ever journey in the Europa League.
“I’m really happy to have signed a new contract with Sunderland,” Le Fee told the club's website.
“From the moment I arrived, I’ve felt the passion of the supporters and the ambition of everyone at the club – I’ve loved my time here.
“We’ve achieved something special together over the past couple of seasons, but I believe this is just the beginning. I feel very settled here, and I’m excited to continue developing, competing at the highest level and helping the club move forward.
“I’m very proud to wear the Sunderland shirt, and I can’t wait to see what we can achieve together in the years ahead.”
The 26-year-old joins a growing list of players to commit their futures to the club, with Romaine Mundle, Robin Roefs, Jenson Seelt and Wilson Isidor all penning new deals since the end of last season.