The 26-year-old has become a defensive mainstay for manager Arsene Wenger and strong performances in the English top-flight earned him four caps for France including a trip to Euro 2012.
"Laurent has been outstanding for us over the last two seasons," Wenger told the club's website.
"When you consider that until 2009 he was playing in Ligue 2 in France and that he is now performing at the very top level in the Premier League and for his country, the development that he has shown has been absolutely exceptional.
"Laurent is a top-class player and I am very pleased he has decided to commit his future to the club."
Koscielny ensured Arsenal gained qualification in to the 2012/13 Champions League when he scored the winner against West Bromwich Albion on the final day of the season.
He said he was delighted with the contract extension and was looking toward a bright future with the Gunners.
"I'm delighted to have reached agreement with the club. I have had a fantastic time here and look forward to an exciting future with Arsenal," said Koscielny.
The centre-back joined Arsenal from FC Lorient in 2010 and after an injury interrupted start has gone on to make a total of 85 appearances.
‘Milan didn’t collapse against Liverpool in Istanbul. We lost focus for six minutes – for the other 114, we played an extraordinary, beautiful game’: AC legend claims they were 'extraordinary' against Reds in 2005 Champions League final
‘Charlton could have qualified for Europe, but selling Scott Parker to Chelsea made the difference. The manager didn’t want him to go and there was a disagreement’: Former Addicks star highlights key reason why they failed to maintain 2003/04 form
