The 31-year-old has spent the last three seasons at The Hawthorns and proved a popular signing after joining from local rivals Birmingham City.
Foster has put pen to paper on an initial four-year deal with his contract including an extension for another year should Albion wish to keep him for a further 12 months.
And the England international is delighted at the prospect of potentially finishing his career at the club.
"When I signed here permanently, I said this is the sort of club I could see myself finishing my career at," he told West Brom's official website.
"And that's exactly how I felt when the club said they wanted to negotiate a new contract.
"It was something I wanted to get sorted as soon as possible. I'm very happy here.
"It was a very obvious and easy decision for me and my family."
Foster rose to prominence when he joined Manchester United from Stoke City in July 2005, despite having failed to make a senior first-team appearance for the Britannia Stadium club.
He left United in 2010 for Birmingham, where he won the League Cup. A move to Albion followed a year later, initially on loan, after Birmingham suffered relegation from the Premier League.
Albion head coach Alan Irvine said: "This is a magnificent signing for the club.
"Ben is one of the best keepers in the country, which he showed when he played really well for England against Costa Rica at the World Cup.
"Ben is extremely professional, which is infectious in training, as he demands high standards of himself and others.
"This is fantastic news for everyone connected with the club."
