The 29-year-old has featured on 17 occasions for the Gunners during the 2021-22 campaign, contributing two assists in the process.
The Egypt international's previous deal at Emirates Stadium was due to expire at the end of June, but he has now signed a new contract until June 2023, with the option of an additional 12 months.
Elneny featured on 14 occasions during the team's 2021-22 Premier League campaign, playing the full 90 minutes in each of their last seven league games of the season.
"I love this club and I feel like part of this family," Elneny told Arsenal Media. "I want to continue at this amazing club and amazing family and I'm very happy and very excited for the future."
Meanwhile, Arsenal boss Mikel Arteta has branded Elneny, who made the move to the club from Basel in 2016, "a really important part of the team".
"Mo is a really important part of the team. He brings endless energy, enthusiasm and commitment to the team and is loved by everyone. He's an important player for us on and off the pitch, a real role model to our younger players and I'm delighted he's staying."
Elneny has represented the Gunners on 147 occasions in all competitions, contributing five goals and 10 assists in the process, including one goal and five assists in 83 Premier League appearances.
The midfielder recently revealed that he wants to finish his career at Emirates Stadium, claiming that the club's supporters 'make him feel special'.
"I feel like when you play in one of the biggest teams in the world and you have an amazing family and the fans are really amazing as well - they make me feel special. You feel like you are special for this club and this club is special for you. Of course, I want to stay here until I finish my career actually," he said.
Arsenal technical director Edu has also lavished praise on Elneny, calling him "so important" for the club, who missed out on Champions League qualification for next term.
"Mo has an incredible mentality which is so important for our squad. He helps the team as much as he can every day. We are all very happy to have him with us as we look to build on what has been achieved this season," said Edu.
The Gunners lost two of their last three Premier League matches of the 2021-22 campaign to Tottenham Hotspur and Newcastle United, which ultimately cost them the chance to secure a top-four finish, meaning that they will feature in the Europa League next term.
The North London club ended their Premier League season in style, though, thumping Everton 5-1 at Emirates Stadium, with Elneny playing the full 90 minutes of the contest with Frank Lampard's side.
Arsenal are allegedly looking to raise £60m from player sales during this summer's transfer window, with the club looking to boost their squad for the 2022-23 campaign with the arrival of a number of signings. body check tags ::