No terms of the agreement were released by the club, but reports out of England estimate Dempsey's annual salary to be about $3 million.
The 26-year-old has scored 14 goals in 81 Premier League games and was tied for the team scoring lead last season with seven.
Dempsey, who has 57 U.S. caps, raised his stock on the player market this summer when he scored three goals in the USA's third-place finish at the Confederations Cup.
His goals, which came against Egypt, Spain and Brazil, earned him the Bronze Ball as the tournament's third-place MVP behind Silver Ball winner Luis Fabiano (Brazil) and Gold Ball winner Kaka (Brazil).

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