Morgan, who joined from Nottingham Forest in 2012, was instrumental as his side secured a return to the Premier League by finishing top of the Championship last season.
And the 30-year-old has now put pen to paper on a deal that will run until June 2017, much to the delight of Leicester manager Nigel Pearson.
Pearson told the club's official website: "Wes has been every bit the captain we hoped he would be when we signed him two and a half years ago.
"He's a leader on and off the pitch, sets a terrific example for young players and is an extremely positive influence on the squad.
"He is one of number of players that has worked incredibly hard to reach the Premier League, both during his time at Leicester and throughout his career, and he fully deserves the opportunity to test himself at that level.
"I'm absolutely delighted that his long-term future remains with us."
Similarly thrilled was Morgan, who set his sights on producing in the top flight.
He added: "I'm delighted to finally commit my future to this club.
"Winning promotion with this squad last season and lifting the Championship trophy were the proudest moments of my career and I cannot wait to hopefully lead the team out on the opening day of the Premier League season.
"We've all worked so hard to win promotion and the whole squad is determined to make the most of it.
"There are some big challenges ahead in the next few years and I'm excited that I'm going to be part of it."
