Bony joined the Swans from Dutch side Vitesse Arnhem in June 2013 for a club-record £12 million (€15m) and the Ivory Coast forward scored 25 goals in his first season.
The 25-year-old’s impressive debut campaign in the Premier League sparked interest from Liverpool, Arsenal and Tottenham last summer but Swansea were determined to hang onto their star striker.
“It’s great news for the club,” Swansea manager Garry Monk said.
“I’ve spoken a lot about what Bony has brought to the club not just on the pitch but off it as well.
“These types of players are ones that we do our best to keep at the club.
“Bony has shown that he is very committed to this club by signing an extension here.”
Bony has scored four goals in 11 league games this season, helping lift Swansea to fifth in the table ahead of their trip to Manchester City on Saturday.